Q2 2024 Curaleaf Holdings Inc Earnings Call

August 7, 2024

Speaker Change: ??? ???

Operator: Good afternoon, and welcome to the Curaleaf Holding second quarter 2024 conference call. All participants will be in a listen-only mode. Should you need any assistance, please signal a conference specialist by pressing the star key, followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press the star key.

Operator: Good afternoon, and welcome to the Curaleaf Holdings second quarter 2024 conference call. All participants will be in a listen-only mode. Should you need any assistance, please signal a conference specialist by pressing the star key, followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then 1 on your touch-tone phone. To withdraw your question, please press star, then 2. Please note this event is being recorded. I would now like to turn the conference over to Camilo Lyon. Please go ahead.

Camilo Lyon: Good afternoon, and welcome to the Curaleaf Holdings second quarter 2024 conference call. All participants will be in a listen-only mode. Should you need any assistance, please signal a conference specialist by pressing the star key, followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then one, on your touch-tone phone. To withdraw your question, please press star, then two. Please note, this event is being recorded. I would now like to turn the conference over to Camilo Lyon. Please go ahead.

Speaker Change: Good afternoon and welcome to the Curaleaf Holdings second quarter 2024 conference call. All participants will be in a lesson only mode.

Speaker Change: Should you need any assistance, please signal a conference specialist by pressing the star key, followed by zero.

Speaker Change: After today's presentation there will be an opportunity to ask questions. To ask a question you may press star then 1 on your touchtone phone. To withdraw your question please press star then 2. Please note this event is being recorded.

Speaker Change: I would now like to turn the conference over to Camilo Lyon. Please go ahead.

Camilo Lyon: TEXT ON SCREEN

unknown: [music]

Camilo Lyon: Good afternoon, everyone, and welcome to Curaleaf's Second Quarter 2024 conference call today, and apologies for the technical difficulties at the start. Today I am joined by Executive Chairman Boris Jordan, Chief Executive Officer Matt Darin, and Chief Financial Officer Ed Kremer.

Camilo Lyon: good afternoon everyone and welcome to teure leaf's second quarter two thousand and twenty four conference call today an apologies for the technical difficulties that start

Speaker Change: today i am joined by executive chairman borre jordan chief executive officer matar and chief financial officer at kimmer

Unknown Executive: Before we begin, I'd like to remind everyone that the comments on today's call will include forward-looking statements within the meaning of the Canadian and U.S. securities laws, which by their nature involve estimates, projections, plans, goals, forecasts, and assumptions, including the successful integration of acquisitions, and are subject to risk and uncertainties that could cause actual results or outcomes to differ materially from those expressed in the forward-looking statements on certain material factors or assumptions These forward-looking statements speak only as of the date of this conference call and should not be relied upon as predictions of future events.

Camilo Lyon: Before we begin, I'd like to remind everyone that the comments on today's call will include forward-looking statements within the meaning of the Canadian and U.S. securities laws, which by their nature involve estimates, projections, plans, goals, forecasts, and assumptions, including the successful integration of acquisitions, and are subject to risk and uncertainties that could cause actual results or outcomes to differ materially from those expressed in the forward-looking statements on certain material factors or assumptions These forward-looking statements speak only as of the date of this conference call and should not be relied upon as predictions of future events.

Speaker Change: Before we begin, I'd like to remind everyone that the comments on today's call will include forward-looking statements within the meaning of the Canadian and U.S. securities laws, which by their nature involve estimates, projections, plans, goals, forecasts, and assumptions.

Unknown Executive: We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise, except as required by applicable law. Additional information about the material factors and assumptions forming the basis of the forward-looking statements and risk factors can be found in the company's filings and press releases on CDAR and EDGAR.

Camilo Lyon: Including the successful integration of acquisitions and are subject to risk and uncertainties that could cause actual results or outcomes to differ materially from those expressed in the forward-looking statements on certain material factors or assumptions that were applied in drawing the conclusion or making a forecast in such statements.

Camilo Lyon: These forward-looking statements speak only as of the date of this conference call and should not be relied upon as predictions of future events.

Camilo Lyon: We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise, except as required by applicable law. Additional information about the material factors and assumptions forming the basis of the forward-looking statements and risk factors can be found in the company's filings and press releases on CDAR and EDGAR.

Camilo Lyon: We undertake no obligation to update or revise any forward-looking statements.

Camilo Lyon: whether as a result of new information, future events, or otherwise.

Kim: except as required by applicable law digitalal information about the material factors and assumptions forming the basis of the forward-looking statements and risk factors kim found in the company's filings and press release on cedar and ecur

Camilo Lyon: During today's conference call, in order to provide greater transparency regarding Curaleaf's operating performance, we will refer to certain non-GAAP financial measures and non-GAAP financial ratios that involve adjustments to GAAP results. Such non-GAAP measures and ratios do not have a standardized meaning under U.S. GAAP. Any non-GAAP financial measures presented should not be considered to be an alternative to financial measures required by U.S. GAAP, should not be considered measures of Curaleaf's liquidity, and are unlikely to be comparable to non-GAAP financial measures provided by other companies.

Unknown Executive: During today's conference call, in order to provide greater transparency regarding Curaleaf's operating performance, we will refer to certain non-GAAP financial measures and non-GAAP financial ratios that involve adjustments to GAAP results. Such non-GAAP measures and ratios do not have a standardized meaning under U.S. GAAP. Any non-GAAP financial measures presented should not be considered to be an alternative to financial measures required by U.S. GAAP, should not be considered measures of Curaleaf's liquidity, and are unlikely to be comparable to non-GAAP financial measures provided by other companies.

Speaker Change: During today's conference call, in order to provide greater transparency regarding Carelease operating performance, we will refer to certain non-GAAP financial measures and non-GAAP financial ratios that involve adjustments to GAAP results. Such non-GAAP measures and ratios do not have a standardized meaning under U.S. GAAP.

Camilo Lyon: Any non-GAAP financial measures presented should not be considered to be an alternative to financial measures required by U.S. GAAP, should not be considered measures of cure-lease liquidity, and are unlikely to be comparable to non-GAAP financial measures provided by other companies.

Unknown Executive: Any non-GAAP financial measures referenced on this call are reconciled to the most directly comparable U.S. GAAP financial measures under the heading Reconciliation of Non-GAAP Financial Measures in our earnings release issued today and available on our investor relations website at ir.curaleaf.com. With that, I'll turn the call over to Chief Executive Officer Matt Jones.

Camilo Lyon: Any non-GAAP financial measures referenced on this call are reconciled to the most directly comparable U.S. GAAP financial measures under the heading Reconciliation of Non-GAAP Financial Measures in our earnings release issued today and available on our investor relations website at ir.curaleaf.com. With that, I'll turn the call over to Chief Executive Officer Matt Jones.

Speaker Change: any non-gaap financial measures reference on this call are reconciled to the most directly comparable u s gaap financial measures under the heading reconciliation of non-gaap financial measures in our earnings release issued today and available on our investor relations website at ir c t com

Magic: with that i'll turn the call over to chapf executive officer magic now

Matthew Darin: Before we get into the details of the call, I'd like to address our investors, the financial community, and all Curaleaf employees listening to the call. After much reflection, I have decided to retire from my post as CEO to focus on more time with my family. When I embarked on my cannabis journey 11 years ago, I could not have envisioned where it would take me. My cannabis career began behind a dispensary counter serving medical patients in the first days of the Illinois market. This experience opened my eyes to the power of cannabis plants and inspired me to dedicate my life to this amazing industry.

magic now: Thank you, Camilo. Good afternoon, everyone.

Magic: Before we get into the details of the call, I'd like to address our investors, the financial community, and all Curaleaf employees listening to the call.

Speaker Change: after much reflection i have decided to retire from my post as ceo to focus on more time with my family

Matthew Darin: When I embarked on my cannabis journey 11 years ago, I could not have envisioned where it would take me. My cannabis career began behind a dispensary counter serving medical patients in the first days of the Illinois market. This experience opened my eyes to the power of the cannabis plants and inspired me to dedicate my life to this amazing industry.

Camilo Lyon: When I embarked on my cannabis journey 11 years ago, I could not have envisioned where it would take me.

Camilo Lyon: My cannabis career began behind a dispensary counter serving medical patients in the first days of the Illinois market.

Camilo Lyon: This experience opened my eyes to the power of the cannabis plants and inspired me to dedicate my life to this amazing industry.

Matthew Darin: My partners and I worked hard to grow the grassroots business rapidly and had the good fortune to sell it to Curaleaf in 2020. I was thrilled to have been part of this transformative transaction that helped create the largest cannabis company in the world. After various leadership positions at Curaleaf, I became CEO in May 2022. And in those two plus years, I've had the honor to work alongside and develop relationships with truly exceptional people whom I will miss.

magic now: My partners and I worked hard to grow the grassroots business rapidly and had the good fortune to sell it to Curaleaf in 2020.

Magic: I was thrilled to have been part of this transformative transaction that helped create the largest cannabis company in the world.

Speaker Change: After various leadership positions at Curaleaf, I became CEO in May 2022 and in those two-plus years I've had the honor to work alongside and develop relationships with truly exceptional people whom I will miss.

Matthew Darin: I'm grateful to Boris for giving me the opportunity to lead the best cannabis company in the world. I will stay on as a special advisor to the CEO until year end to ensure there is an orderly transition as Boris steps in to lead Curaleaf into the future. I am proud of all that we have accomplished and look forward to watching the company execute its vision of being a global leader in Canada.

Camilo Lyon: I'm grateful to Boris for giving me the opportunity to lead the best cannabis company in the world.

Boris: I will stay on as a special advisor to the CEO until year end to ensure there is an orderly transition as Boris steps in to lead Curaleaf into the future.

Boris: I am proud of all that we have accomplished and look forward to watching the company execute its vision of being the global leader in cannabis.

Matthew Darin: We are at a pivotal time for our industry on the cusp of federal reform, and the future is very bright. I leave knowing the business is foundationally stronger today than when I found it, and more importantly, that Curaleaf's best days are yet to come.

Boris: We are in a pivotal time for our industry, on the cusp of federal reform, and the future is very bright.

Speaker Change: I leave knowing the business is foundationally stronger today than when I found it, and more importantly, that Curaleaf's best days are yet to come.

Boris Jordan: Thank you, Matt, for your leadership, your contributions to the business, and your endless dedication to Curaleaf. It's been a pleasure working with you, and along with the entire company, I wish you a great time with your family, and I'm grateful that you're staying on as a special advisor to me in this transition. With Curaleaf's deep bench of talent, I have every confidence this will be a smooth

Boris: Forrest

Speaker Change: Thank you, Matt, for your leadership, your contributions to the business, and your endless dedication to Curaleaf. It's been a pleasure working with you, and along with the entire company, I wish you a great time with your family, and I'm grateful that you're staying on as a special advisor to me in this transition.

Speaker Change: With Cureleaf's deep bench of talent, I have every confidence this will be a smooth transition. While I have remained close to the business as Executive Chairman, in my expanded role as CEO, I will be able to better effectuate further streamlining of the organization.

Boris Jordan: While I have remained close to the business as Executive Chairman, in my expanded role as CEO, I'll be able to better effectuate further streamlining of the organization, speed up decision making, accelerate growth initiatives, and drive margin expansion. In doing this, Curaleaf will return to its entrepreneurial roots, which were grounded in a more streamlined and leaner organization. I have always operated under this mindset to successfully create numerous multi-billion dollar global businesses across financial services, technology, and energy industries, and cannabis will be no different.

Boris Jordan: While I have remained close to the business as Executive Chairman, in my expanded role as CEO, I'll be able to better effectuate further streamlining of the organization, speed up decision-making, accelerate growth initiatives, and drive margin expansion. In doing this, Curaleaf will return to its entrepreneurial roots, which were grounded in a more streamlined and leaner organization. I have always operated under this mindset to successfully create numerous multi-billion dollar global businesses across financial services, technology, and energy industries, and cannabis will be no different.

Speaker Change: Speed up Decision Making, Accelerate Growth Initiatives, and Drive Margin Expansion.

Boris: And doing this, Curaleaf will return to its entrepreneurial roots, which were grounded in a more streamlined and leaner organization.

Boris: I have always operated under this mindset to successfully create numerous multi-billion dollar global businesses across financial services, technology, and energy industries, and cannabis will be no different.

Boris Jordan: Since co-founding Curaleaf 10 years ago, my team and I have been involved in 26 acquisitions in the U.S. and Europe to build Curaleaf into the global cannabis business it is today. During the last 18 months, we started an aggressive streamlining campaign, which led to the shutdown of operations in efficient markets, significant expense reductions of over $90 million, and a return to a regionalized management structure, which has brought us closer to our customers and our market.

Speaker Change: Since co-founding Cureleaf 10 years ago, my team and I have been involved in 26 acquisitions in the US and Europe to build Cureleaf into the global cannabis business it is today.

Speaker Change: During the last 18 months, we started an aggressive streamlining campaign which led to a shutdown of operations in efficient markets, significant expense reductions of over $90 million, and a return to a regionalized management structure which has brought us closer to our customer in our markets.

Boris Jordan: This work positions us to reap the benefits of the platform that we've created with revenue growth, expanding margins, and cash flow generation. More recently, we embarked on a profit growth action plan aimed at driving greater efficiencies across all of our cultivation processing facilities. Driving these changes is our new EVP of Operations, who recently came to us from one of the top-tier competitors. His impact on the team and the overall business has already been felt.

Boris Jordan: This work positions us to reap the benefits of the platform that we've created with revenue growth, expanding margins, and cash flow generation. More recently, we embarked on a profit growth action plan aimed at driving greater efficiencies across all of our cultivation processing facilities. Driving these changes is our new EVP of operations, who recently came to us from one of the top tier competitors. His impact on the team and the overall business has already been felt.

Speaker Change: This work positions us to reap the benefits of the platform that we've created with revenue growth, expanding margins, and cash flow generation.

Speaker Change: More recently, we've embarked on a profit growth action plan aimed at driving greater efficiencies across all of our cultivation and processing facilities.

Speaker Change: Driving these changes is our new EVP of Operations, who recently came to us from one of the top tier competitors.

Boris Jordan: Processes and standards have improved dramatically, which is contributing to higher quality and more consistent flower. These initiatives will build on an already strong market share position Curaleaf enjoys across the country, with Select as the number one vape brand and Grassroots and Fine holding two of the top four positions in flower. Our focus on yield management and cost containment is also starting to bear fruit and will combine to drive tangible margin improvement over the next two to three quarters.

Boris Jordan: Processes and standards have improved dramatically, which is contributing to higher quality and more consistent flower. These initiatives will build on an already strong market share position Curaleaf enjoys across the country, with Select as the number one vape brand in grassroots and Find holding two of the top four positions in flower. Our focus on yield management and cost containment is also starting to bear fruit and will combine to drive tangible margin improvement over the next two to three quarters.

Speaker Change: There's impact on the team and the overall business has already been felt.

Speaker Change: Processes and standards have improved dramatically, which is contributing to higher quality and more consistent flour.

Speaker Change: These initiatives will build on an already strong market share position Curaleaf enjoys across the country, with Select as the number one bait brand in grassroots and Find holding two of the top four positions in flower.

Speaker Change: Our focus on yield management and cost containment is also starting to bear fruit and will combine to drive tangible margin improvement over the next two to three quarters.

Boris Jordan: In fact, we exited the second quarter on a high note with a June growth margin of 50%, and that trajectory has improved in July. Today we are in a much more focused and leaner organization than we were two years ago, but I see many opportunities for the company to go further in its efforts. We have a concrete strategy centered on building a platform for our brands that will power our financial model and drive growth globally.

Speaker Change: In fact, we exited the second quarter in a high note with a June growth margin of 50%, and that trajectory has improved in July .

Speaker Change: today we are in a much more focused and leaner organization and reward two years ago but i see many opportunities for the company to go further in its separfort we have a concrete strategy centered on building a platform for our brands that will power our financial model and drive growth globally

Boris Jordan: To that end, I have always had a great vision of making Curaleaf the dominant global consumer products manufacturer and distributor of cannabis products. And while there has been great progress made in the face of turbulent markets, there's much more for us to achieve. I will work tirelessly for our customers, our shareholders, and our employees to ensure the company reaches its fullest potential, particularly as the industry embarks on its next significant evolution once rescheduling is finalized. Moving on to our second quarter review.

Speaker Change: To that end, I have always had a great vision of making Curaleaf the dominant global consumer products manufacturer and distributor of cannabis products. And while there has been great progress made in the face of turbulent markets,

Speaker Change: There is much more for us to achieve. I will work tirelessly for our customers and our shareholders and our employees to ensure the company reaches its fullest potential, particularly as the industry embarks on its next significant evolution once rescheduling is finalized.

Boris Jordan: Second quarter revenue of $342 million was up 2% compared to last year's second quarter revenue of $336 million. Adjusted gross margins of 48% were up 250 basis points compared to last year. As previously mentioned, our gross margin showed successive improvement each month, with June exiting the quarter at 50%. I'm encouraged by this progress and expect back-half margins to also trend in the 50-plus percent range. Adjusted EBITDA was $73 million, or 21.3 percent, compared to $72 million, or 21.5 percent, last year.

Boris Jordan: Second quarter revenue of $342 million was up 2% compared to last year's second quarter revenue of $336 million. Adjusted gross margins of 48% were up 250 basis points compared to last year. As previously mentioned, our gross margin showed successive improvement each month, with June exiting the quarter at 50%. I'm encouraged by this progress and expect back half margins to also trend in the 50 plus percent range. Adjusted EBITDA was $73 million, or 21.3%, compared to $72 million, or 21.5%, last year.

Speaker Change: Moving on to our second quarter review. Second quarter revenue of $342 million, up 2% compared to last year's second quarter revenue of $336 million.

Speaker Change: Adjusted gross margins of 48% was up 250 basis points compared to last year. As previously mentioned, our gross margins showed successive improvement each month, with June exiting the quarter at 50%.

Speaker Change: I'm encouraged by this progress and expect back half margins to also trend in the 50 plus percent range.

Speaker Change: adjusted ebitda was seventy three million dollars are twenty-one point three percent compared to seventy two million for twenty one point five percent last year continued investments on our rapidly growing international segment coupled with new start-up investments in the hem company wegh on our margins by combined hundred eighty based poin

Boris Jordan: Continued investments in our rapidly growing international segment, coupled with new start-up investments in the hemp company, weighed on our margins by a combined 180 base points. These investments are critical to supporting the current and future revenue streams from these newer segments that complement our domestic regulated business. In addition, we also made $58 million in tax, acquisition, and debt-related payments during the quarter to further reduce leverage on our balance sheet, while also investing $25 million in capital projects.

Boris Jordan: Continued investments in a rapidly growing international segment coupled with new startup investments in the hemp company weighed on our margins by a combined 180 base points. These investments are critical to supporting the current and future revenue streams from these newer segments that complement our domestic regulated business. In addition, we also made $58 million in tax, acquisition, and debt-related payments during the quarter to further reduce leverage on our balance sheet, while also investing $25 million in capital projects.

Speaker Change: These investments are critical to supporting the current and future revenue streams from these newer segments.

Speaker Change: that complement our domestic regulated business. In addition, we also made $58 million in tax acquisition and debt-related payments during the quarter to further reduce leverage on our balance sheet while also investing $25 million in capital projects.

Boris Jordan: Despite these investments and debt payments, Curaleaf ended the quarter with $89 million of cash on the balance sheet and generated operating cash flow from 10-year operations of $30 million and $6 million in free cash. Thus far in 2024, unfolding as the, and 2020 is unfolding as we guided with growth backend weighted. Specifically, we entered the year with a view that growth would be subdued in the first half due to continued price compression, the shift from retail to wholesale, and increased competition from the hemp market before accelerating in the second half as state and country catalysts come online.

Boris Jordan: Despite these investments and debt payments, Curaleaf ended the quarter with $89 million of cash on the balance sheet and generated operating cash flow from 10-year operations of $30 million and $6 million in free cash. Thus far in 2024, unfolding as a, and 2020 is unfolding as we guided with growth back end weighted. Specifically, we entered the year with a view that growth would be subdued in the first half due to continued price compression, the shift from retail to wholesale, and increased competition from the hemp market before picking up in the second half as state and country catalysts come online.

Speaker Change: Despite these investments and debt payments, Curaleaf ended the quarter with $89 million of cash on the balance sheet and generated operating cash flow for continuing operations of $30 million and $6 million in free cash flow.

Speaker Change: Thus far in 2024, unvolving as the

Speaker Change: 2020 is unfolding as we guided with growth back-end weighted.

Speaker Change: Specifically, we entered the year with a view that growth would be subdued in the first half due to continued price compression, the shift from retail to wholesale, and increased competition from the hemp market, before accelerating in the second half as state and country catalysts come online.

Boris Jordan: Let's delve into these catalysts that will drive accelerated growth and include New York, Ohio, Florida, international, and hemp. After a rocky start to its adult use program, New York is showing signs of becoming a strong and healthy market for us. Actions taken by the governor's office to support law enforcement have resulted in over a thousand illicit operators shutting down, at last count, to the direct benefit of the legal market.

Boris Jordan: Let's delve into these catalysts that will drive accelerated growth and include New York, Ohio, Florida, international, and hemp. After a rocky start to its adult use program, New York is showing signs of becoming a strong and healthy market for us. Actions taken by the governor's office to support law enforcement have resulted in over a thousand illicit operators shutting down at last count, to the direct benefit of the legal market.

Speaker Change: Let's delve into these catalysts that will drive accelerated growth and include New York, Ohio, Florida, International, and Hemp.

Speaker Change: After a rocky start to its adult use program, New York is showing signs of becoming a strong and healthy market for us.

Speaker Change: Actions taken by the Governor's Office to support law enforcement has resulted in over 1,000 illicit operators shutting down at last count to the direct benefit of the legal market.

Boris Jordan: Assuming this trend of enforcement continues, New York is on a solid path to becoming the $5 billion market opportunity we always envisioned it would be. To extend our leadership position in the state, we recently opened a new medical store in Rochester and converted two of our medical stores to co-located medical and adult use. With respect to wholesale, which is the market we are eyeing, we have been successful in opening new independent accounts every week. To date, there are approximately 151 adult-use dispensaries in New York, and we are selling into roughly 50% of them, a solid increase from last quarter. Without question, New York is about maximizing wholesale.

Speaker Change: Assuming this trend of enforcement continues, New York is on a solid path to becoming a $5 billion market opportunity we always envisioned it would be. To extend our leadership position in the state, we recently opened a new medical store in Rochester and converted two of our medical stores to co-located medical and adult use stores.

Speaker Change: With respect to wholesale, which is the prize we are eyeing, we have been successful in opening new independent accounts every week. To date, there are approximately 151 adult-use dispensaries in New York, and we are selling into roughly 50% of them, a solid increase from last quarter.

Boris Jordan: We are hyper-focused on allocating the necessary resources and upgrading our sales down to ensure we are best positioned at all partner doors. In the second quarter, these efforts translated into 153% wholesale growth compared to last year. We are thrilled to have been a part of the first group of dispensaries to open Ohio Institute, our brand portfolio across the state as adult use sales formally began yesterday. We had a fantastic reception by the local community at our first approved adult use dispensary in Newark, Ohio, store with lines out the door, and our second adult use store in Chahoga Falls opened at 8am today. Given its low medical penetration rate, Ohio is a market we see reaching two billion over the next few years.

Speaker Change: Without question, New York is about maximizing wholesale. We are hyper-focused on allocating the necessary resources and upgrading our sales down to ensure we are best positioned in all partner doors.

Speaker Change: In the second quarter, these efforts translated into 153% wholesale growth compared to last year.

Boris Jordan: We are hyper-focused on allocating the necessary resources and upgrading our sales down to ensure we are best positioned at all partner doors. In the second quarter, these efforts translated into 153% wholesale growth compared to last year. We are thrilled to have been a part of the first group of dispensaries to open Ohio Institute, our brand portfolio across the state as adult use sales formally began yesterday. We had a fantastic reception by the local community at our first approved adult use dispensary, Newark, Ohio, store with lines out the door, and our second adult use store, Chahoga Falls, opened at 8am today. Given its low medical penetration rate, Ohio is a market we see reaching two billion over the next few years.

Speaker Change: We are thrilled to have been a part of the first group of dispensaries to open Ohio Institute, our brand portfolio across the state as adult use sales formally commenced yesterday. We had a fantastic reception by

Speaker Change: A local community, our first approved adult-use dispensary, Newark, Ohio, store with lines out the door. And our second adult-use store, Jehovah Falls, opened at 8 a.m. today.

Speaker Change: Given its low medical penetration rate, Ohio is a market we see reaching $2 billion over the next few years.

Boris Jordan: To capture as much share as possible, our retail team is moving quickly to open our next six stores, which we expect will be complete by early 2025. Our Johnstown facility is one of our most productive in our fleet, and we are looking forward to introducing All Hinds to the broader wholesale market with our full assortment of top-tier brands and products, with Amendment 3 consistently polling in the mid-60s. The Cannabis Adult Use Ballot Initiative in Florida is looking promising.

Boris Jordan: To capture as much share as possible, our retail team is moving quickly to open our next six stores, which we expect will be complete by early 2025. Our Johnstown facility is one of our most productive in our fleet, and we're looking forward to introducing all kinds of the broader wholesale market to our full assortment of top-tier brands and products, with Amendment 3 consistently polling in the mid-60s. The Cannabis Adult Use Ballot Initiative in Florida is looking promising.

Speaker Change: To capture as much share as possible, our retail team is moving quickly to open our next six stores, which we expect will be complete by early 2025. Our Johnstown facility is one of our most productive in our fleet, and we are looking forward to introducing All Heinz to the broader wholesale market for our full assortment of top-tier brands and products.

Speaker Change: with Amendment 3 consistently polling in the mid-60s.

Boris Jordan: To this end, we are investing in tripling our indoor cultivation capacity and expanding our total store counts to approximately 85 in the state by the time adult use likely begins next May. We opened one new store during quarter two, and expect two stores to open next week, with opening pace set to accelerate thereafter. Not surprisingly, Florida is consuming the lion's share of our CapEx budget this year.

Speaker Change: The Cannabis Adult Use Ballot Initiative in Florida is looking promising.

Speaker Change: To this end, we are investing in tripling our indoor cultivation capacity and expanding our total score count to approximately 85 in the state by the time adult use likely begins next May.

Speaker Change: We opened one new store during quarter two, expect two stores to open next week, with opening dates set to accelerate thereafter.

Speaker Change: Not surprisingly, Florida is consuming the lion's share of our CapEx budget this year. However, given the opportunity for the market to triple to $6 billion at high margins due to its retail-only structure, we are not slowing down.

Boris Jordan: However, given the opportunity for the market to triple to $6 billion at high margins due to its retail-only structure, we are not slowing down. Florida already is the top state by revenue and margin for us, and the potential conversion to an adult use market will have a significantly positive impact on our economy. Our international business experienced superb 78% year-over-year growth, led by the UK, Germany, Poland, and contributions from Northern Green Acquisition. Following the enactment of Germany's expanded Pillar 1 medical program on April 1st, the number of new cannabis patients entering the program has seen a significant surge, resulting in a remarkable 76% sequential growth for Curaleaf in the quarter.

Boris Jordan: However, given the opportunity for the market to triple to $6 billion at high margins due to its retail-only structure, we are not slowing down. Florida already is the top state by revenue and margin for us, and the potential conversion to an adult use market will have a significantly positive impact on our business. Our international business experienced superb 78% year-over-year growth, led by the UK, Germany, Poland, and contributions from Northern Green Acquisition. Following the enactment of Germany's expanded Pillar 1 medical program on April 1st, the number of new cannabis patients entering the program has seen a significant surge, resulting in a remarkable 76% sequential growth for Curaleaf in the quarter.

Speaker Change: Florida already is the top state by revenue and margin for us and the potential conversion to adult use market will have a significantly positive impact on our business

Speaker Change: Our international business experienced superb 78% year-over-year growth led by the UK, Germany, Poland, and contributions from Northern Green Acquisition.

Speaker Change: Following the enactment of Germany's expanded Pillar 1 medical program on April 1st, the number of new cannabis patients entered the program has seen a significant surge, resulting in a remarkable 76% sequential growth for Curaleaf in the quarter.

Boris Jordan: Our 420 brand, known for its premium positioning, continues to enjoy an estimated 20% market share. In addition, today we introduced our Curaleaf branded flower at more accessible price points to accommodate the growing number of cost-conscious patients looking for product quality and consistency at affordable prices, further helping to solidify and extend our market share position. These initial numbers out of Germany are impressive and underscore our view that cannabis demand by Germans is robust.

Boris Jordan: Our 420 brand, known for its premium positioning, continues to enjoy an estimated 20% market share. In addition, today, we introduced our Curaleaf branded flower at more accessible price points to accommodate the growing number of cost-conscious patients looking for product quality and consistency at affordable prices, further helping to solidify and extend our market share position. These initial numbers out of Germany are impressive and underscore our view that cannabis demand by Germans is robust.

Speaker Change: Our 420 brand, known for its premium positioning, continues to enjoy an estimated 20% market share. In addition, today we introduced our Curaleaf branded flower at more accessible price points to accommodate the growing number of cost-conscious patients looking for product quality and consistency at affordable prices.

Speaker Change: Further helping to solidify and extend our market share position.

Speaker Change: These initial numbers out of Germany are impressive and underscore our view that cannabis demand by Germans is robust.

Boris Jordan: However, we are still in the early stages of growth in this vastly underpenetrated market. Total patients today are estimated to be between 200,000 and 300,000 out of a population of 84 million, implying just a 0.4% penetration rate.

Speaker Change: However, we are still in the early stages of growth in this vastly underpenetrated market. Total patients today are estimated to be between 200,000 and 300,000 out of a population of 84 million, implying just a 0.4% penetration.

Boris Jordan: I am highly optimistic about Germany's cannabis future and its influence on the rest of the EU nations, thus putting Curaleaf in an enviable position to win across the continent. The United Kingdom also showed robust growth, and we are extending our share position. Our UK clinic was awarded Cannabis Clinic of the Year at the Cannabis Business Awards in June, amongst other awards recognizing the Curaleaf team as an international industry leader. On April 22nd, we closed the Northern Green acquisition, marking another milestone in our strategic vision to create a truly global supply chain through which we can distribute our portfolio of brands in 15 countries.

Boris Jordan: I am highly optimistic about Germany's cannabis future and its influence on the rest of the EU nations, thus putting Curaleaf in an enviable position to win across the continent. The United Kingdom also showed robust growth, and we are extending our shared position. Our UK clinic was awarded Cannabis Clinic of the Year at the Cannabis Business Awards in June, amongst other awards recognizing the Curaleaf team as international industry leaders. On April 22, we closed the Northern Green acquisition, marking another milestone in our strategic vision to create a truly global supply chain through which we can distribute our portfolio of brands in 15 countries. To that end, we shipped our first wholesale orders to Australian and New Zealand partners, marking Curaleaf's entry into the Asian region.

Speaker Change: I'm highly optimistic on Germany's cannabis future and its influence on the rest of the EU nations, thus putting Curaleaf in an enviable position to win across the continent.

Speaker Change: The United Kingdom also showed robust growth and we are extending our shared position. Our UK clinic was awarded Cannabis Clinic of the Year at the Cannabis Business Awards in June , amongst other awards recognizing the Curaleaf team as international industry leaders.

Speaker Change: On April 22nd, we closed the Northern Green acquisition, marking another milestone in our strategic vision to create a truly global supply chain through which we can distribute our portfolio of brands in 15 countries.

Boris Jordan: To that end, we shipped our first wholesale orders to Australian and New Zealand partners, marking Curaleaf's entry into the Asian region. NGC is an integral part of our international strategy as well as our, as well as our Margin Enhancement Plan. To this point, I am pleased to report that international gross margins improved meaningfully this quarter, with NGC partially contributing to the gains. We will begin seeing the full quarter benefits of the acquisition in the third and fourth quarters.

Speaker Change: To that end, we shipped our first wholesale orders to Australian and New Zealand partners, marking Curaleaf's entry into the Asian region.

Boris Jordan: NGC is an integral part of our international strategy as well as our margin enhancement plan. To this point, I am pleased to report that international gross margins improved meaningfully this quarter, with NGC partially contributing to the gains. We will begin seeing the full quarter benefits of the acquisition in the third and fourth quarters.

Speaker Change: NGC is an integral part of our international strategy as well as our

Speaker Change: as well as our margins enhancement planant to this point im pleased to report that international growthross margins improve meaningfully this quarter with ndc partially contributing to the gains we will begin seeing the full quarter benefits of the acquisition in the third fourth quarters and dc's contribution to our margins will increase

Boris Jordan: NGC's contribution to our margins will increase. As we complete the integration of NGC and begin to scale production in our Portuguese cultivation facility with purely branded flour, we expect to realize continued international gross margin improvements through year-end, thus narrowing the gap with our domestic gross margin. When assessing the nascent market signals in Europe, it is impossible to dismiss the striking similarities between Curaleaf's U.S. business in 2018 and Curaleaf's international business today. In 2018, our domestic revenue was $77 million, and over five years, we grew it to $1.3 billion.

Boris Jordan: NGC's contribution to our margins will increase. As we complete the integration of NDC and begin to scale production in our Portuguese cultivation facility with purely branded flour, we expect to realize continued international gross margin improvements through year-end, thus narrowing the gap with our domestic gross margin. When assessing the nascent market signals in Europe, it is impossible to dismiss the striking similarities between Curaleaf's U.S. business in 2018 and Curaleaf's international business today. In 2018, our domestic revenue was $77 million, and over five years, we grew it to $1.3 billion.

Speaker Change: As we complete the integration of NDC and begin to scale production in our Portuguese cultivation facility with purely branded flour, we expect to realize continued international gross margin improvements through year-end, thus narrowing the gap with our domestic gross margins.

Speaker Change: When assessing the nascent market signals in Europe , it is impossible to dismiss the striking similarities between Curaleaf's U.S. business in 2018 and Curaleaf's international business today.

Speaker Change: In 2018, our domestic revenue was $77 million, and over five years we grew it to $1.3 billion. In Europe , which is twice the population of the U.S., we are the largest operator, and yet it remains early days in the development of the European cannabis industry.

Boris Jordan: In Europe, which is twice the population of the U.S., we are the largest operator, and yet it remains early days in the development of the European cannabis market. Given the tremendous opportunity ahead, I believe the growth rates in our international segment over the next five years could look similar to what we've experienced in the U.S. In June, we announced our entry into the hemp-derived THC market with two product lines: select edibles and select zero proof cell. Our decision to enter the hemp category was based on two factors. First, to expand the select brand in a capital light manner to consumers we are not reaching today with responsibly sourced, safe, and tested products. And second, to use it as a hedge against our regulated business.

Boris Jordan: In Europe, which is twice the population of the U.S., we are the largest operator, and yet it remains early days in the development of the European cannabis market. Given the tremendous opportunity ahead, I believe the growth rates in our international segment over the next five years could look similar to what we've experienced in the U.S. In June, we announced our entry into the hemp-derived THC market with two product lines: select edibles and select zero proof cell. Our decision to enter the Hemp category was based on two factors. First, to expand the select brand in a capital-like manner to consumers we are not reaching today with responsibly sourced, safe, and tested products. And second, to use it as a hedge against our regulated business.

Speaker Change: Given the tremendous opportunity ahead, I believe the growth rates in our international segment over the next five years could look similar to what we've experienced in the U.S.

Speaker Change: In June , we announced our entry into the hemp-derived THC market with two product lines, Select Edibles and Select Zero-proof Seltzers.

Speaker Change: Our decision to enter the HEM category was based on two factors. First, to expand the select brand in a capital-like manner to consumers we are not reaching today with responsibly sourced, safe, and tested products.

Boris Jordan: Leveraging distribution channels not available in our regulated business, we launched our direct-to-consumer website, thehempcompany.com, that currently ships to 25 states plus D.C. We also entered into a groundbreaking partnership with a large direct-to-consumer distribution partner in the U.S. There's no question that the regulated cannabis and hemp worlds are converging rapidly. Ultimately, we believe the consumer will not distinguish between the two channels as long as the trust in our products and brands remains uniform.

Boris Jordan: Leveraging distribution channels not available in our regulated business, we launched our direct-to-consumer website, thehempcompany.com, that currently ships to 25 states plus DC. We also entered into a groundbreaking partnership with a large direct-to-consumer distribution partner in the U.S. There's no question that the regulated cannabis and hemp worlds are converging rapidly. Ultimately, we believe that consumers will not distinguish between the two channels as long as the trust in our products and brands remains uniform.

Speaker Change: and second, to use it as a hedge against our regulated business.

Speaker Change: Leveraging distribution channels not available in our regulated business, we launched our direct-to-consumer website, TheHempCompany.com, that currently ships to 25 states plus DC.

Speaker Change: We also entered into the groundbreaking partnership with a large direct-to-consumer distribution partner in the U.S. There is no question that the regulated cannabis and hemp worlds are converging rapidly. Ultimately, we believe the consumer will not distinguish between the two channels as long as the trust in our products and brands remains uniform.

Boris Jordan: While it's still early days, we're pleased with the positive reception our hemp line of select products is seeing from customers, distributors, and retailers, as this category is poised to become a more meaningful contributor to Curaleaf in the coming year. As such, we expect to grow the hemp business rapidly through increased breadth of distribution partners and expanded product line assortment in beverages. We believe the combination of our Select Hemp and Select Cannabis lines will further extend the Select brand's number one position in the U.S. All that said, I'm cognizant of the choppy environment the industry is contending with. Price compression is still present in important states like Arizona and Florida, where we have a number one and number two share position, respectively.

Boris Jordan: While it's still early days, we're pleased with the positive reception our hemp line of select products is seeing from customers, distributors, and retailers, as this category is poised to become a more meaningful contributor to Curaleaf in the coming year. As such, we expect to grow the hemp business rapidly through increased breadth of distribution partners and expanded product line assortment in beverages. We believe the combination of our select hemp and select cannabis lines will further extend the select brand's number one position in the U.S. All that said, I'm cognizant of the choppy environment the industry is contending with. Price compression is still present in important states like Arizona and Florida, where we have a number one and number two share position, respectively.

Speaker Change: While still early days, we are pleased with the positive reception to our hemp line of select products we are seeing from customers, distributors, and retailers as this category is poised to become a more meaningful contributor to Curaleaf in the coming years.

Speaker Change: As such, we expect to grow the hemp business rapidly through increased breadth of distribution partners and expanded product line assortment in beverages. We believe the combination of our select hemp and select cannabis lines will further extend the select brand's number one position in the U.S.

Speaker Change: All that said, I'm cognizant of the choppy environment the industry is contending with. Price compression is still present in important states like Arizona and Florida, where we have a number one and number two share position, respectively.

Boris Jordan: And the natural shift, mixed shift from retail sales to wholesale is evolving quickly in states such as Illinois, New Jersey, and New York as independent doors open. Ultimately, the expansion of the wholesale market is healthy for the industry and the growth of our brand portfolio. Wholesale distribution of our brands has always been our long-term vision, and we will continue to scale the business in a manner that leverages the benefits of both channels of distribution.

Boris Jordan: And the natural mix shift from retail sales to wholesale is evolving quickly in states such as Illinois, New Jersey, and New York as independent doors open. Ultimately, the expansion of the wholesale market is healthy for the industry and the growth of our brand portfolio. Wholesale distribution of our brands has always been our long-term vision, and we will continue to scale the business in a manner that leverages the benefits of both channels of distribution.

Speaker Change: And the natural mix shift from retail sales to wholesale is evolving quickly in states such as Illinois, New Jersey, and New York as independent doors open. Ultimately, the expansion of the wholesale market is healthy for the industry and the growth of our brand portfolio.

Speaker Change: Wholesale distribution of our brands has always been our long-term vision and we will continue to scale the business in a manner that leverages the benefits of both channels of distribution.

Boris Jordan: Turning to our outlook, we remain consistent in our view that the business will accelerate in the back half of the year, both in revenue and margin. We continue to expect full-year revenue growth at a mid-single-digit rate, albeit at the lower end of the range, consistent with our current consensus of $1.4 billion. As previously discussed, we see many exciting growth opportunities to compete for, not the least of which are international and the hemp company.

Speaker Change: Turning to our outlook, we remain consistent in our view that the business will accelerate in the back half of the year, both in revenue and margin. We continue to expect full-year revenue will grow at a mid-single-digit rate, albeit at the lower end of the range, consistent with our current consensus of $1.4 billion.

Speaker Change: As previously discussed, we see many exciting growth opportunities to compete for, not the least of which are international in the hemp company. We continue to expect adjusted EBITDA margins to be in the mid-20s, albeit at the lower end of the range due to these anticipated investments.

Boris Jordan: We continue to expect adjusted EBITDA margins to be in the mid-20s, albeit at the lower end of the range due to these anticipated investments. In closing, I step into the CEO role with my eyes wide open about the complexities of operating a global cannabis enterprise, but I'm also excited about the opportunities in front of Curaleaf to forge new paths. We will be mindful to remain focused on executing the basics with precision every day.

Speaker Change: In closing, I step into the CEO roles with my eyes wide open about the complexities of operating a global cannabis enterprise, but I'm also excited about the opportunities in front of Curaleaf to forge new paths.

Speaker Change: We will be mindful to remain focused on executing the basics with precision every day. With the strength and support from our 5,000-plus global team members, whom I want to thank for their daily effort and hard work, Curaleafs have never been in a better position to lead the global cannabis market.

Boris Jordan: With the strength and support from our 5,000-plus global team members, whom I want to thank for their daily effort and hard work, Curaleafs has never been in a better position to lead the global cannabis market. With that, I'll turn the call over to our CFO, Ed Kremer.

Speaker Change: With that, I'll turn the call over to our CFO , Ed Kremer.

Edward Kremer: Total revenue for the second quarter was $342 million, representing a year-over-year increase of 2%. Growth was driven by strength in Maryland, New York, Utah, and Ohio, as well as 78% growth in our international Our domestic segment represented 93% of total revenue, and our international segment expanded 7% of total revenue, 150 basis points higher than in the first quarter. As previously mentioned, international growth was driven by the UK, Germany's pillar one medical market expansion, and the addition of NGC.

Edward Kremer: Total revenue for the second quarter was $342 million, representing a year-over-year increase of 2%. Growth was driven by strength in Maryland, New York, Utah, and Ohio, as well as 78% growth in our international business. Our domestic segment represented 93% of total revenue, and our international segment expanded 7% of total revenue, 150 basis points higher than in the first quarter. As previously mentioned, international growth was driven by the UK, Germany's pillar one medical market expansion, and the addition of NGC.

Ed Kremer: thank you boris total revenue for the second quarter was three hundred and forty two mion dollars representing a year-over-year increase two percent growth was driven by strength in maryland new york utah ohiilo as well as seventy percent growth in our international segment

Ed Kremer: Our domestic segment represented 93% of total revenue and our international segment expanded 7% of total revenue, 150 basis points higher than in the first quarter.

Speaker Change: As previously mentioned, international growth was driven by the UK, Germany's Pillar One medical market expansion, and the addition of NGC.

Edward Kremer: By channel, retail revenue was $265 million compared to $277 million in the second quarter of 2023, down 4% year-over-year as the shift from retail to wholesale that began in earnest last quarter continued in Q2, most notably in New Jersey, Illinois, and New York, where the largest number of independent retailers have opened this year. Specifically, a Belmar, New Jersey, store had an outsized impact on the year-over-year retail decline due to increased store openings in the immediate area.

Speaker Change: by channel retail revenue was two hundred and sixty five million compared to two hundred seventy seven million in the second quarter of two thousand and twenty three down four percent year-over-year as the shshipt from retail to wholesale that began in earnest last quarter continued in q two

Speaker Change: Most notably, New Jersey, Illinois, and New York, where the largest number of independent retailers have opened this year. Specifically, our Belmar, New Jersey store had an outsized impact on the year-over-year retail decline due to increased store openings in the immediate area.

Edward Kremer: Wholesale revenue increased 31% to $77 million compared to last year's $58 million and represented 22% of total revenue. The strength of our wholesale revenue was driven by New Jersey, Illinois, New York, Pennsylvania, and our international segment. We delivered our first wholesale shipments to Australia and New Zealand in the second quarter. Moving into retail consumer metrics,

Speaker Change: also revenue increased thirty-one percent to seventy-seven million compared to last year's fifty- eight million and represented twenty-two percent of total revenue

Speaker Change: The strength of our wholesale revenue was driven by New Jersey, Illinois, New York, Pennsylvania, and our international segment.

Speaker Change: We delivered our first wholesale shipments to Australia and New Zealand in the second quarter.

Edward Kremer: Transactions were flattish in the second quarter compared to last year. Second quarter basket trends were consistent with the first quarter, as year over year units per transaction were down 7%, partially offset by an AUR increase of 3% compared to last year. We believe the lower income consumer continues to opt for our value offerings as pressure on disposable income from inflation and high interest rates has not abated. That said, innovation and newness are inspiring increased trial rates on products like liquid diamonds and fruits.

Edward Kremer: Moving into retail consumer metrics, transactions were flattish in the second quarter compared to last year. Second quarter basket trends were consistent with the first quarter, as year over year units per transaction were down 7%, partially offset by an AUR increase of 3% compared to last year. We believe the lower income consumer continues to opt for our value offerings as pressure on disposable income from inflation and high interest rates has not abated.

Speaker Change: Moving into retail consumer metrics. Transactions were flattish in the second quarter compared to last year. Second quarter basket trends were consistent with the first quarter as year-over-year units per transaction were down 7%, partially offset by AUR increase of 3% compared to last year.

Speaker Change: We believe the lower income consumer continues to opt for our value offerings as pressure on disposable income from inflation and high interest rates has not abated. That said, innovation and newness are inspiring increased trial rates on products like Liquid Diamonds and Fruit Stick.

Edward Kremer: That said, innovation and newness are inspiring increased trial rates on products like liquid diamonds and fruit. Our second quarter gross profit was $160 million, resulting in a 47% gross margin. Adjusted gross profit was $163 million, or 48%. Sequentially, Q2 adjusted gross margin remained steady as a 100 basis point increase in our vertical mix and higher utilization were offset by price compression. However, year-over-year, Q2 adjusted gross margin increased 250 basis points due to stronger wholesale margin and higher utilization rates in our facility. SG&A expenses were $110 million in the second quarter and increased $1 million from the year-ago period. Corus DNA was $106 million, an increase of $12 million from the prior year.

Edward Kremer: Our second quarter gross profit was $160 million, resulting in a 47% gross margin. Adjusted gross profit was $163 million, or 48%. Sequentially, Q2 adjusted gross margin remained steady as a 100 basis point increase in our vertical mix and higher utilization were offset by price compression. However, year-over-year, Q2 adjusted gross margin increased 250 basis points due to stronger wholesale margin and higher utilization rates in our facility. SG&A expenses were $110 million in the second quarter and increased $1 million from the year-ago period. Corus DNA was $106 million, an increase of $12 million from the prior year.

Speaker Change: Our second quarter gross profit was $160 million, resulting in a 47% gross margin. Adjusted gross profit was $163 million, or 48%.

Speaker Change: Sequentially, Q2 adjusted gross margin remained steady as 100 basis point increase in our vertical mix and higher utilization were offset by price compression.

Speaker Change: Year-over-year Q2 adjusted gross margin increased 250 basis points due to stronger wholesale margin and higher utilization rates in our facilities.

Speaker Change: SG&A expenses were $110 million in the second quarter and increased $1 million from the year-ago period.

Speaker Change: Core SG&A was $106 million, an increase of $12 million from prior year.

Edward Kremer: The year-over-year increase in our core SG&A primarily reflects investments in international, including the acquisition of NGC, new star openings in Florida, and our new hemp line. SG&A accounted for 32% of revenue in the second quarter and a decrease of 40 basis points compared to the year-ago period. Our second quarter core SG&A rate was 31%, an increase of 280 basis points. Our second quarter net loss from continuing operations was $49 million. The net loss per share from continuing operations was $0.06.

Edward Kremer: The year-over-year increase in our core SG&A primarily reflects investments in international, including the acquisition of NGC, new star openings in Florida, and our new helpline. SG&A accounted for 32% of revenue in the second quarter and a decrease of 40 basis points compared to the year-ago period. Our second quarter core SG&A rate was 31%, an increase of 280 basis points. Our second quarter net loss from continuing operations was $49 million. The net loss per share from continuing operations was $0.06.

Speaker Change: The year-over-year increase in our core SG&A primarily reflects investments in the international, including the acquisition of NGC, new star openings in Florida, and our new hemp line.

Speaker Change: SG&A was 32% of revenue in the second quarter, a decrease of 40 basis points compared to the year ago period. Our second quarter core SG&A rate was 31%, an increase of 280 basis points.

Speaker Change: Second quarter net loss from continuing operations was $49 million. Net loss per share from continuing operations was $0.06.

Edward Kremer: Adjusted EBITDA in the second quarter was $73 million compared to $72 million in the prior year period, a 1% increase. The second quarter adjusted EBITDA margin was 21.3 compared to 21.5 in the prior year. Turning to our balance sheet and cash flow, we ended the quarter with cash and cash equivalents of $89 million. Inventory decreased $9 million, or 4%, compared to last year's second quarter, while net sales grew 2%.

Speaker Change: Adjusted EBITDA in the second quarter was $73 million compared to $72 million in the prior year period, a 1% increase. Second quarter adjusted EBITDA margin was $21.3 compared to $21.5 in the prior year.

Speaker Change: Turning to our balance sheet and cash flow.

Speaker Change: We ended the quarter with cash and cash equivalents of $89 million. Inventory decreased $9 million or 4% compared to last year's second quarter while net sales grew 2%.

Edward Kremer: Net capital expenditures in the second quarter were $25 million. Given the amendments we discussed earlier, we expect 2024 CapEx spending to be approximately $70 million, the higher end of our range, largely due to our Florida expansion initiative. And should Florida's Amendment 3 pass in November, we could opt to pull forward additional investments from 2025 into the fourth quarter.

Speaker Change: Net capital expenditures in the second quarter were $25 million. Given the amendments we discussed earlier, we expect 2024 CapEx spending to be approximately $70 million, the higher end of our range, largely due to our Florida expansion initiatives.

Speaker Change: And should Florida's Amendment 3 pass in November , we could opt to pull forward additional investments from 2025 into the fourth quarter. We will provide more color on our next earnings call.

Edward Kremer: We will provide more color on our next earnings call. To date, and in the second quarter, we generated operating cash flow from continuing operations of $76 million and $30 million, respectively. Similarly, free cash flow from continuing operations was $39.6 million. Our outstanding debt was $563 million net of unamortized debt discounts and deferred financing fees, of which 82% is not due until December 2026. As we continue taking actions to reduce leverage on our balance sheet, during the quarter, we repurchased $15 million of our December 2026 bonds at a 7.75% discount, which combined with our interest savings will save the company approximately $4 million that would have been paid through maturity.

Speaker Change: You're to date and in the second quarter we generated operating cash flow from continuing operations of 76 million and 30 million respectively. Similarly free cash flow from continuing operations with 39 and 6 million dollars respectively.

Speaker Change: Our outstanding debt was $563 million net of unamortized debt discounts and deferred financing fees, of which 82% is not due until December 2026.

Speaker Change: As we continue taking actions to reduce leverage on our balance sheet, during the quarter we repurchased $15 million of our December 2026 bonds at a 7.75% discount, which combined with our interest savings will save the company approximately $4 million that would have been paid through maturity.

Edward Kremer: We will continue to be opportunistic with future bond purchases in the second quarter. In the second quarter, we made a total of $58 million in payments for taxes, interest, and acquisition-related payments. I'd like to provide an update on our tax position. After completing our analysis and based on a review of the relevant provision and scheduling history, we are taking the position that Section 280E of the Internal Revenue Code does not apply to Curaleaf's operations.

Speaker Change: We will continue to be opportunistic with future bond purchases in the second quarter.

Speaker Change: In the second quarter, we made a total of $58 million in payments for taxes, interest, and acquisition-related payments.

Edward Kremer: As such, we intend to file amended federal and state income tax returns with refund claims for 2022 and protected claims for the fiscal years 2020 and 2021. For 2023 and beyond, Curaleaf will file as a normal corporate file. This position is reflected in our Q2 financial statements, moving a substantial portion of our taxes from current to long-term liability. We're halfway through the year.

Edward Kremer: As such, we intend to file amended federal and state income tax returns with refund claims for 2022 and protected claims for the fiscal years 2020 and 2021; for 2023 and beyond, Curaleaf will file as a normal corporate file. This position is reflected in our Q2 financial statements, moving a substantial portion of our taxes from current to long-term liability. We're halfway through the year.

Speaker Change: I'd like to provide an update on our tax position. After completing our analysis and based on review of the relevant provision and scheduling history, we are taking the position that the application of Section 280E of the Internal Revenue Code does not apply to Curaleaf's operations.

Speaker Change: As such, we intend to file amended federal and state income tax returns with refund claims for 2022 and protected claims for the fiscal year 2020 and 2021. For 2023 and beyond, Curaleaf will file as a normal corporate filer.

Speaker Change: This position is reflected in our Q2 financial statements, moving a substantial portion of our taxes from current to long-term liabilities.

Edward Kremer: And while there's macro uncertainty around us, we're optimistic about the growth catalysts we have articulated. We are reiterating our fiscal 2024 guidance for mid single-digit revenue growth, albeit at the lower end of the range. Similarly, with respect to adjusted even dollar margins, we expect to land at the lower end of our mid-20s range as we invest in Florida, international, and the hemp industry. With that, I'll turn the call back to the operator to open the line.

Speaker Change: We are halfway through the year, and while there is macro uncertainty around us, we are optimistic about the growth catalysts we have articulated. We are reiterating our fiscal 2024 guidance to mid-single-digit revenue growth, albeit at the lower end of the range.

Speaker Change: Similarly, with respect to adjusted EBITDA margins, we expect to land at the lower end of our mid-20s range as we invest in Florida, International, and the Hemp Company.

Speaker Change: With that, I'll turn the call back to the operator to open the line for questions.

Operator: Thank you. We will now begin the question and answer session. To ask a question, you may press star, then 1 on your touchtone phone. If you're using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star, then 2. The first question comes from Aaron Grey with Alliance Global Partners.

Operator: Thank you. We will now begin the question and answer session. To ask a question, you may press star, then 1 on your touch-tone phone. If you're using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star, then 2. Your first question comes from Aaron Grey with Alliance Global Partners.

Speaker Change: Thank you. We will now begin the question and answer session. To ask a question, you may press star, then one on your touchtone phone.

Speaker Change: If you're using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star, then two.

Speaker Change: The first question comes from Erin Gray with Alliance Global Partners. Please go ahead.

Aaron Grey: Hi, good evening. Thank you for the question. And Matt, congratulations on all your time and good luck in your future endeavors.

Speaker Change: Hi, good evening. Thank you for the question. And Matt, congratulations on all your time and good luck in your future endeavors.

Aaron Grey: First question for me, just regarding the hemp business that you guys have launched now. I wonder if you could speak further in terms of the distribution opportunities. You referenced 25 states, a direct consumer. One also asked about additional color in terms of the number of states that'll be coming on in terms of brick and mortar. You mentioned a large distributor they have a partnership with. And then also, if you could expand upon that, I believe it is a partnership.

Aaron Grey: First question for me, just regarding the hemp business that you guys have launched now. I wonder if you could speak further in terms of the distribution opportunities. You referenced 25 states, a direct consumer. I wanna also ask about additional color in terms of the number of states that'll be coming on in terms of brick and mortar. You mentioned a large distributor they have a partnership with. And then also, if you could expand upon that, I believe it is a partnership.

Erin Gray: First question for me, just regarding the hemp business.

Speaker Change: that you guys have watched now.

Speaker Change: I wonder if you could speak further in terms of the distribution opportunities. You've referenced 25 states, a direct consumer.

Speaker Change: One also asked about additional color in terms of the number of states that will be coming on in terms of brick and mortar. You mentioned a large distributor they have a partnership with.

Speaker Change: And then also, if you could expand upon, I believe, a partnership you have with DoorDash and the number of states that would be available, how that's structured, if it's similar to the DTC states. So any color in terms of how you're planning the brick-and-mortar distribution for hemp would be helpful.

Matthew Darin: Aaron, thanks. This is Matt.

Speaker Change: Yeah, Aaron, thanks. This is Matt. So yeah, so we launched, you know, during the quarter here, direct-to-consumer through TheHempCompany.com with our full assortment of initial launch of

Matthew Darin: So yeah, so we launched, you know, during the quarter here, direct to consumer through the hempcompany.com with our full assortment of initial launch beverages and gummies. We're, as we said, distributing directly to people's homes in 25 states, kind of throughout the country, including some, you know, major markets, some of which we already operate in, like Florida, others that are new markets for us like Texas. So that's part of the exciting opportunity to get our brands in many large new states that, you know, we've not had our brands in previously.

Speaker Change: Beverages and Gummies, or as we said,

Aaron: Distributing directly to people's homes in 25 states, kind of throughout the country, including some, you know, major markets, you know, some of which we already operate in, like Florida, others that are new markets for us, like Texas. So that's part of the exciting opportunity is getting our brands in many large new states that, you know, we've not had our brands in previously.

Matthew Darin: We also launched with DoorDash. You know, today you can order delivery directly to your door on the DoorDash app in four states. And we have many more coming here. We're gonna have 13 states on DoorDash here in the coming months, you know, as products get shipped to all those states. You know, we're also going to be announcing here soon some partnerships on the brick and mortar side with distributors into a bunch of different markets, as well as, you know, with some retailers.

Speaker Change: We also launched with DoorDash. Today you can order direct to your door on the DoorDash app in four states, and we have many more coming here. We're going to have 13 states on DoorDash here in the coming months as products get shipped to all those. We're also going to be announcing here...

Speaker Change: Soon, some partnerships on the brick-and-mortar side with distributors into a bunch of different markets as well as with some retailers. So I can't share anything on that specifically right now, but we're pretty excited for the opportunity to get our brands not only direct-to-consumer but on shelves here, and more to come on that in the near future.

Matthew Darin: So I can't share anything on that specifically right now, but we're pretty excited for the opportunity to get our brands, not only direct to consumer, but on shelves here. And, you know, more to come on that in the near future.

unknown: Okay, great. Thanks a lot for that call, Matt.

Aaron Grey: Okay, great. Thanks for that comment, Matt.

Speaker Change: Okay, great. Thanks a lot for that comment, Matt. Second question for me, just in terms of the SG&A and related to the margin guide.

Aaron Grey: Second question for me, just in terms of the SG&A and related to the margin guide. So, it sounds like some of the expenses with international and hemp were 180 basis points, so about $6 million. How do we think about that going forward? Was there some that was more, you know, one-time in nature that just needed to be done for the setup for Germany or hemp?

Aaron Grey: Second question for me, just in terms of the SG&A and related to the margin guide. So it sounds like some of the expenses with international and hemp were 180 basis points, so about $6 million. How do we think about that going forward? Was there some that was more, you know, one-time in nature that just needed to be done for the setup for Germany or hemp?

Speaker Change: It sounds like some of the expenses with International and Hemp, 180 basis points, so about $6 million.

Speaker Change: How do we think about that going forward? Was there some that was more, you know, one-time in nature that just needed to be done for the setup for Germany or hemp, or is a lot of that going to now be within the base and need to be leveraged via sales? So just trying to help triangulate how we think about, you know, the sales growth, some of the helpful color you gave on the margins that have improved, and then how we think about that SG&A trend line going forward. Thank you.

unknown: Or is a lot of that going to now be within the base and need to be leveraged via sales? So, just trying to help triangulate how we think about, you know, the sales growth, some of the helpful color you gave on the margins that have improved, and then how we think about that SG&A trend line going forward. Thank you.

Unknown Executive: Or is a lot of that going to now be within the base and need to be leveraged via sales? So just trying to help triangulate how we think about, you know, the sales growth, some of the helpful color you gave on the margins that have improved, and then how we think about that SG&A trend line going forward. Thank you.

Unknown Executive: So, thanks for the question. We will be, as we said, as I said much earlier, we exited the second quarter at a 50% gross margin, which is the first time we've hit that since our changeover to GAAP from IFRS, and we will continue to. We saw July numbers fractionally higher than that, so we're already seeing an improvement going into the third quarter, and we expect to continue to see improvements in gross margins.

Boris Jordan: So, thanks for the question. We will be, as we said, as I said in my speech, we exited the second quarter at a 50% gross margin, which is the first time we've hit that since our changeover to GAAP from IFRS, and we will continue to. We saw July numbers fractionally higher than that, so we're already seeing an improvement going into the third quarter. And we expect to continue to see improvements in gross margins.

Speaker Change: So thanks for the question, we will be, as we said, as I said in my speech, we exited the second quarter at a 50% gross margin, which is the first time we hit that since our changeover to GAAP from IFRS.

Speaker Change: We saw July numbers fractionally higher than that, so we're already seeing an improvement going into the third quarter, and we expect to continue to see improvements in gross margins.

Boris Jordan: There's a tremendous amount of work that's been done since last year and this year on improving the financial metrics of the company. Particularly right now, we're really focused on the COGS aspect of the business, specifically around our facilities and efficiencies coming out of facilities. Five months ago, we brought in a very experienced head of operations from probably the best in class operator in the sector, and we've already seen marketable improvements in our business, particularly on the facility side, in terms of yields, quality of flour, and efficiency.

Unknown Executive: There's a tremendous amount of work that's been done since last year and this year on improving the financial metrics of the company. Particularly right now, we're really focused on the COGS aspect of the business, specifically around our facilities and efficiencies coming out of facilities. Five months ago, we brought in a very experienced head of operations from probably the best-in-class operator in the sector, and we've already seen marketable improvements in our business, particularly on the facility side in terms of yields, quality of flour, and efficiencies, and so we continue to see improvements in those margins.

Speaker Change: There's a tremendous amount of work that's been done since last year and this year on improving the financial metrics of the company. Particularly right now, we're really focused on the COGS aspect of the business, specifically around our facilities and efficiencies coming out of facilities. Five months ago, we brought on a very experienced

Speaker Change: a head of operations from...

Speaker Change: probably a desestin-class

Josh Edelstein: and Josh Edelstein.

Boris Jordan: And so, we continue to see an improvement in those margins. We think they'll continue to expand, and those hits that we took in the second quarter were one-time deals on the hemp business. Hemp business going forward, those were startup costs, and also there were some fees and things associated with the NGC transaction integration of NGC into Curaleaf, but those were really one time only, and we'll be moving on into the third quarter already with straight reporting on margins without those being affected to our bottom line.

Unknown Executive: We think they'll continue to expand, and those hits that we took in the second quarter were one time deals on the hemp business. Hemp business going forward, those were startup costs, and also there were some fees and things associated with the NGC transaction integration of NGC into PureLeaf, but those were really one time only, and we'll be moving on into the third quarter already with straight reporting on margins without those being affected by our bottom line. Okay, good.

Speaker Change: The hits that we took in the second quarter were one time on the

Speaker Change: On the hemp business, on the hemp business going forward, those were start-up costs.

Speaker Change: And also there were some fees and things associated with the NGC transaction integration of NGC into Curaleaf. But those were really one time and we'll be moving on into the third quarter already with straight reporting on margins without those being affected to our bottom line.

unknown: Okay, great. Thanks for the call. Now I'll jump back into the queue. The next question comes from Frederico Gomes with ATB Capital Markets. Please go ahead. All right, thanks for taking my call.

Aaron Grey: Okay, great. Thanks for the call. Now I'll jump back into the queue. Your next question comes from Frederico Gomes with ATB Capital Markets. Please go ahead. Hi, thanks for taking my call.

Speaker Change: Okay, great. Thanks for the call. Now I'll jump back into the queue.

Frederico Gomes: Your next question comes from Frederico Gomes with ATB Capital Markets. Please go ahead.

Frederico Gomes: The next question comes from Frederico Gomes with ATB Capital Markets. Please go ahead.

Speaker Change: The next question comes from Frederico Gomes with ATB Capital Markets. Please go ahead.

Frederico Gomes: Hi, thanks for taking my questions. First question is just on the international side, so you mentioned first shipments to Australia and New Zealand. I'm curious if you could talk about

Frederico Gomes: Australia specifically, you know, the opportunity that you see in that market, and I believe that it's a market that is growing, so, you know, any comments there?

Boris Jordan: All the markets, all the international markets, given their nation-state, are really growing and expanding. Australia is a large market and is expanding. However, there's quite a bit of competition in that marketplace. New Zealand is a smaller market with less competition and higher margins. So both are very interesting. They both have slightly different dynamics.

Unknown Executive: All the markets, all the international markets, given their nation-state, are really growing and expanding. Australia is a large market and is expanding. However, there's quite a bit of competition in that marketplace. New Zealand is a smaller market with less competition and higher margins. So both are very interesting. They both have slightly different dynamics.

Speaker Change: All the markets, all the international markets, given their nation state, are really growing and expanding. Australia is a large market and is expanding. However, there's quite a bit of competition in that marketplace. New Zealand is a smaller market with less competition and higher margins.

Speaker Change: So both are very interesting. They both have slightly different dynamics.

unknown: And at the moment, we are doing a thorough review as to whether or not we wanna get into those markets domestically. So today we're just importing Curaleaf white label and Curaleaf branded products to introduce those to the markets, working with local distributors. In most markets, however, Curaleaf tends to go vertical and vertical in the sense that we tend to want to own the distribution ourselves. We have not made that commitment to either Australia and New Zealand at this point in time; we're working through third-party distributors.

Unknown Executive: And at the moment, we are doing a thorough review as to whether or not we wanna get into those markets domestically. So today we're just importing Curaleaf white label and Curaleaf branded products to introduce those to the market, working with local distributors. In most markets, however, Curaleaf tends to go vertical and vertical in the sense that we tend to want to own the distribution ourselves. We have not made that commitment to either Australia and New Zealand at this point in time; we're working through third-party distributors.

Speaker Change: And at the moment, we are doing a thorough review as to whether or not we want to get in domestic into those markets. So today, we're just importing Curaleaf white label and Curaleaf branded products to introduce those to the market, working with local distributors.

Speaker Change: In most markets, however, Curaleaf tends to go vertical, and vertical in the sense that we tend to want to own the distribution ourselves.

Speaker Change: We have not made that commitment to either Australia or New Zealand at this point in time. We're working through third-party distributors, but, for instance, in Europe , in all the markets that we operate, we also control the end distributors in the local countries that we operate in.

Unknown Executive: But for instance, in Europe, in all the markets that we operate in, we also control the end distributors in the local countries that we operate in. And that allows us to control the quality of the product and the distribution build relationships with the end consumers, as well as on the B2B side with the pharmacies that distribute our products. And so we are reviewing Australia and New Zealand from that perspective. We have not yet made a decision as to whether or not we want to get into those markets, but it's still early days. Your next question comes from Russell Stanley with Beacon Securities. Please go ahead. Good afternoon. Thanks for taking my question.

unknown: But for instance, in Europe, in all the markets that we operate in, we also control the end distributors in the local countries that we operate in. And that allows us to control the quality of the product and the distribution build relationships with the end consumers, as well as on the B2B side with the pharmacies that distribute our products. And so we are reviewing Australia and New Zealand from that perspective. We have not yet made a decision as to whether or not we want to get into those markets, but it's still early. Your next question comes from Russell Stanley with Beacon Securities. Please go ahead. Good afternoon. Thanks for taking my question.

Speaker Change: And that allows us to control the quality product and the distribution, build relationships with the end consumers, as well as on the B2B side with the pharmacies that distribute our products.

Speaker Change: and so we we are review of showing to zealing from that perspective we have not yet made a decision as to whether ornot we want to get into those markets but it's still early based

Russell Stanley: Your next question comes from Russell Stanley with Beacon Securities. Please go ahead.

Russell Stanley: Your next question comes from Russell Stanley with Baking Securities. Please go ahead.

Boris Jordan: To be honest, Russell, we actually are welcoming some of these bottlenecks because if we didn't have them, I think that the business would, you know, getting our supply chains and everything in order in order to supply the market is giving us. These bottlenecks are giving us some time to do that because the market is actually growing a bit faster than we originally anticipated. We're seeing very, very strong growth in the third quarter again, with, you know, outsized performance, particularly in Germany, but also in the UK.

Speaker Change: Your next question comes from Russell Stanley with Beacon Securities. Please go ahead.

Russell Stanley: Good afternoon, thanks for taking my question. Apologies if I missed this earlier, but you identified some bottlenecks to growth in Germany on

Russell Stanley: On the May call, signing telemedicine platforms, getting doctors trained, packaging of pharmacies, wondering where you've seen some progress and where you think there's still more work to do on those fronts.

Unknown Executive: To be honest, Russell, we actually are welcoming some of these bottlenecks because if we didn't have them, I think that the business would, you know, getting our supply chains and everything in order in order to supply the market is giving us. These bottlenecks are giving us some time to do that, because the market is actually growing a bit faster than we originally anticipated. We're seeing very, very strong growth in the third quarter again, with, you know, outsized performance, particularly in Germany, but also in the UK.

Speaker Change: Be honest, Russell. We actually are welcoming some of these bottlenecks because if we didn't have them, I think that the business would, you know, getting our supply chains and everything in order in order to supply the market is giving us these bottlenecks are giving us some time to do that because the market is actually growing a bit faster than we originally anticipated.

Speaker Change: We're seeing very, very strong growth in the third quarter again with, you know, outsized performance and particularly in Germany, but also the UK.

unknown: So in many ways, some of the bottlenecks are kind of welcome, I think, not only to Curaleaf but to everybody else, as we're trying to get all the supply chains in order in order to supply. Don't forget, as I said in my script, it's an 84 million person market. So if that market penetrates at the level, for instance, of where Florida is on a medical basis, and there's recently been further lessening of the rules in terms of getting your prescriptions, things like that, then, you know, this could be a very, very large market very, very quickly.

Unknown Executive: So in many ways, some of the bottlenecks are kind of welcome, I think, not only to Curaleaf but to everybody else, as we're trying to get all the supply chains in order in order to supply. Don't forget, as I said in my script, it's an 84 million person market. So if that market penetrates at the level, for instance, of where Florida is on a medical basis, and there's recently been further lessening of the rules in terms of getting your prescriptions, things like that, then, you know, this could be a very, very large market very, very quickly.

Speaker Change: So, in many ways, some of the bottlenecks are kind of welcome, I think not only to Curaleaf, but to everybody else as we're trying to get all the supply chains in order in order to supply. Don't forget, as I said in my script, it's an 84 million person market. So if that market penetrates at the level, for instance, of where Florida is on a medical basis...

Speaker Change: and there's been recently a further lessening of the rules in terms of getting your prescriptions, things like that.

unknown: And I don't believe the industry is fully ready to supply that market, which is a high-class problem in the short term, but it is nonetheless an issue for the whole market. So overall, we're very pleased with the growth rates where everyone is working through the various distributors, everybody's working through the various bottlenecks. And I fully expect that we're going to see outsized growth both in the third and the fourth quarter coming out of this.

Unknown Executive: And I don't believe the industry is fully ready to supply that market, which is a high-class problem in the short term, but it is nonetheless an issue for the whole market. So overall, we're very pleased with the growth rates, where everyone is working through the various distributors, everybody's working through the various bottlenecks. And I fully expect that we're going to see outsized growth both in the third and the fourth quarter coming out of this.

Speaker Change: Then, you know, this could be a very, very large market very, very quickly, and I don't believe the industry is fully ready to supply that market.

Speaker Change: which is a high-class problem short-term, but it is nonetheless an issue for the whole market. So, overall, we're very pleased with the growth rates, where everyone is working through the various distributors, everybody's working through the various bottlenecks, and I fully expect that we're going to see outsized growth both in the third and the fourth quarter coming out of that market.

Scott Fortune: Your next question comes from Scott Fortune with Wealth Capital Partners. Please go ahead.

Scott Fortune: Your next question comes from Scott Fortune, whose company is Wealth Capital Partners. Please go ahead.

Speaker Change: Your next question comes from Scott Fortune with Wealth Capital Partners. Please go ahead.

Scott Fortune: Yeah, good afternoon. Thanks for the questions here.

Scott Fortune: Yeah, good afternoon. Thanks for the questions here. Just a little bit more color on the Florida market and your positioning. I know you're putting a pretty much a fair amount of CapEx in there.

Unknown Executive: Just a little bit more color on the Florida market and your positioning. I know you're putting a pretty fair amount of CapEx in there from a production standpoint and kind of a store base ahead of potential adult use. Just a sense of building out that state ahead of adult use and your expectations of potentially continuing to fund or help the campaign for a positive vote approval there in November. Just a little more color on Florida would be great. So, um,

Boris Jordan: Just a little bit more color on the Florida market and your positioning. I know you're putting pretty much a fair amount of CapEx in there from a production standpoint and kind of the store base ahead of potential adult use. Just a sense of building out that state ahead of adult use and your expectations of potentially continuing to fund or help the campaign for a positive vote approval there in November. Just a little more color on Florida would be great. So,

Scott Fortune: from a production standpoint and kind of the store base ahead of potential adult use, just a sense of building out that state ahead of adult use and your expectations on.

Speaker Change: Potentially continuing to fund or help the campaign for a positive vote approval there in November . Just a little more color on Florida would be great.

Boris Jordan: So we already funded a portion of some of the commitments in the first quarter, as you know, together with some of the other players. We are in discussions right now as a group of making a second funding round in order to help get this over the line. It is polling well, but nonetheless, we're not taking anything for granted. And I think everybody wants to join together and try to make this thing work.

Unknown Executive: Yes, so we already funded a portion of some of the commitments in the first quarter, as you know, together with some of the other players. We are in discussions right now as a group about making a second funding round in order to help get this over the line. It is polling well, but nonetheless, we're not taking anything for granted, and I think everybody wants to join together and try to make this thing work.

Speaker Change: Yes, so we already funded a portion of some of the commitments in the first quarter, as you know, together with some of the other players. We are in discussions right now as a group of making a second.

Speaker Change: funding in order to to help get this over the line. It is polling well but nonetheless we're not taking anything for granted and I think everybody wants to join together try to make this thing

Boris Jordan: Most of the burden has obviously fallen on the largest operator, Trulief, but then the next two largest players have picked up the difference, and some of the other players have contributed not much at all to the process.

Unknown Executive: Most of the burden has obviously fallen on the largest operator, Trueleaf, but then the next two largest players have picked up the difference, and some of the other players have contributed not much at all to the process, but we're all trying to rally the troops to get as much money committed so that we can fight the naysayers in that process.

Speaker Change: O'Rourke.

Speaker Change: Most of the burden has obviously fallen on the largest operator, Trueleaf, but then the second two largest players have picked up the difference, and some of the other players have...

Boris Jordan: But we're all trying to rally the troops to get as much money committed so that we can fight the naysayers in that process. In terms of the Florida market, we have always taken a cautious approach to the staging of our CapEx. Originally, because of timing, we built out the shell and all the infrastructure, electricity, and things like that for the expanded growth.

Speaker Change: contributed not not much at all to the process but we're all trying is rally the troops to get as much money committed so that we can fight the na sayers in that in that process

Unknown Executive: In terms of the Florida market, we have always taken a cautious approach to the staging of our CapEx. Originally, because of timing, we built out the shell and all the infrastructure, electricity, and things like that for the expanded grows. But then we mothballed the rest of it, waiting to see whether this was going to get on the ballot. Once we realized in March and April that this was going to get on the ballot, we started the second wave of our CapEx, which was signing leases and getting stores in place to get to that 85 level, as well as starting to expand the growth facilities.

Speaker Change: In terms of the Florida market, we have always taken a cautious approach to the staging of our CapEx. Originally, because of timing, we built out the shell and all the infrastructure, electricity and things like that, for the expanded growth.

Boris Jordan: But then we've off-balanced the rest of it, waiting to see whether this was going to get on the ballot. Once we realized in March and April that this was going to get on the ballot, we started the second wave of our CapEx, which was signing leases and getting stores in place to get to that 85 level, as well as starting to expand the growth facilities. We've made a decision to get these growth facilities into a significant position by November.

Speaker Change: But then we off-balled.

Speaker Change: The rest of it waiting to see whether this was going to get on the ballot. Once we realized in March and April that this was getting on the ballot, we started the second wave of our CapEx, which was signing leases and getting stores in place to get to that 85 level, as well as starting to expand the grow facilities.

Unknown Executive: We've made a decision to invest in getting these growth facilities into a significant position by November. We're actually going to be planting late October into some of that capacity so that we have available flower ready. We're then going to wait for the November vote. If the November vote is positive, we're going to have the third wave of CapEx, which will finish the facilities, which will then be the rest of the facilities will be finished and planted by early, late March and early April so that we can be ready for a May and June launch.

Speaker Change: We've made a decision to invest, to get these growth facilities into a significant position by November . We're actually going to be...

Boris Jordan: We're actually going to be planting late October into some of that capacity so that we have available flowers ready. We're then going to wait for the November vote. If the November vote is positive, we're going to have the third wave of CapEx, which will finish the facilities, and the rest of the facilities will be finished and planted by early, late March and early April so that we can be ready for a May and June launch.

Speaker Change: planting late October into some of that capacity so that we have available flower ready. We're then going to wait for the November vote. If the November vote is positive, we're going to have the third wave of CapEx, which will finish the facilities.

Speaker Change: which will then be the rest the facilities will be finished and planted by early a late margin early april so that we could be ready for a may and june launch

Boris Jordan: So we have a phased approach to all of our CapEx, depending on what the results are going to be like. We're also in a position where, if by chance, we don't think this will happen, but if, by chance, we don't get adult use, those facilities are going to be very, very helpful in our medical business because we have had some shortages of product and flower on the medical side and certainly of quality, because we're building high-quality indoor facilities and, as you also know, have both outdoor and greenhouse.

Unknown Executive: So we have a phased approach to all of our CapEx, depending on what the results are going to be like. We're also in a position where, if by chance, we don't think this will happen, but if, by chance, we don't get adult use, those facilities are going to be very, very helpful in our medical business because we have had some shortages of product and flower on the medical side and certainly of quality, because we're building high-quality indoor facilities and, as you also know, have both outdoor and greenhouse.

Speaker Change: So we have a phasing of all of our CAPEX depending on what the results are going to be like. We're also in a position where if by chance, we don't think this will happen, but if by chance we don't get adult use, those facilities are going to be very, very helpful in our medical business because we have had some shortage of product and flour on the medical side and certainly of quality because we're building high quality indoor and Curaleaf, as you also know, has both outdoor and greenhouse. So we could stop growing in some of the outdoor and greenhouse and just grow in the indoor facilities, which will raise the quality of flour for the medical market.

Boris Jordan: So we could stop growing in some of the outdoor and greenhouse and just grow in the indoor facilities, which will raise the quality of the flower for the medical market. So all in all, we have planned this in such a way to mitigate any risk if, by chance, we don't get adult use, but we don't expect that to happen.

Unknown Executive: So we could stop growing in some of the outdoor and greenhouse and just grow in the indoor facilities, which will raise the quality of the flower for the medical market. So all in all, we have planned this in such a way to mitigate any risk if, by chance, we don't get adult use, but we don't expect that to happen.

Speaker Change: So all in all, we have planned this in such a way to mitigate any risk if by chance we don't get adult use, but we don't expect that to be the case.

Matt Bottomley: Your next question comes from Matt Bottomley with Kenicor GUT. Please go ahead.

Matt Bottomley: Your next question comes from Matt Bottomley with the Canacor Junior Team. Please go ahead.

Speaker Change: Your next question comes from Matt Bottomley with Kennecall GVP. Please go ahead.

Matt Bottomley: Yeah, good evening. Thanks for the questions. Boris, you mentioned, I think, a few markets, New York, Ohio, or Germany, which together represent a near-term growth catalyst for the company. Specifically, on Ohio, I'm just wondering, you know, relative to your current retail footprint and the near-term opportunity here, is there a specific strategy for getting to that sort of eight-store cap or do you have sufficient capacity or maybe, you know, competing capacity with respect to service the Just what's your strategy on the ability to get, you know, on the ground running here in a market that I guess just opened up for the first time this week? Yeah, so we had

Boris Jordan: Yeah, good evening. Thanks for the questions. Boris, you mentioned, I think, a few markets, New York, Ohio, or Germany, which together represent near-term growth talents for the company. Specifically, on Ohio, I'm just wondering, you know, relative to your current retail footprint and the near-term opportunity here, is there a specific strategy for getting to that sort of eight-store cap, or do you have sufficient capacity or maybe, you know, competing capacity with respect to service the wholesale Just what's your strategy on the ability to get, you know, on the ground running here in a market that I guess just opened up for the first time this week? Yeah, so we had

Matt Bottomley: Yeah, good evening. Thanks for the questions. Boris, you've mentioned, I think, a few markets, New York, Ohio, or Germany, you know, combined representing near-term growth catalysts for the company. Specifically on Ohio, I'm just wondering, you know, relative to your current retail footprint and the near-term opportunity here, is there a specific strategy into getting to that sort of eight-store cap or do you have sufficient capacity or maybe, you know, competing capacity with respect to service the wholesale market there? Just what's your strategy on the ability to get, you know, on the ground running here in a market that I guess just opened up for the first time this week?

Unknown Executive: And so we had really outsized results from the store that opened yesterday. We had another store that opened today for adult use.

Boris Jordan: So we had really outsized results from the store that opened yesterday. We had another store that opened today for adult use, and we were surprised it was well above our internal projections for what we expected in that business.

Speaker Change: So we had really outsized results out of the store that opened yesterday. We have another store that opened today for adult use.

Unknown Executive: We were surprised it was well above our internal projections of what we expected in that business. So that's a pleasant surprise in a difficult market. We also have our best performing, in terms of yields, grow operation in Ohio. So we fully expect and already have started to supply the wholesale market there, with very significant demand coming into us on a wholesale product basis. And we expect pricing in the early parts of that process over the next six to 12 months to be almost at the level of retail pricing because of the lack of supply.

Speaker Change: We were surprised it was well above our internal projections on what we expected in that business. So that's a pleasant surprise in a difficult market.

Boris Jordan: So that's a pleasant surprise in a difficult market. We also have our best performing, in terms of yields, grow operation in Ohio. So we fully expect and already have started to supply the wholesale market there, with very significant demand coming into us on a wholesale product basis. And we expect pricing in the early parts of that process over the next 6 to 12 months to be almost at the level of retail pricing because of the lack of supply.

Speaker Change: We also have our best performing, in terms of yields, grow operation in Ohio, so we fully expect and already have started to supply the wholesale market there.

Speaker Change: with very significant demand coming in to us on a wholesale product basis. And we expect pricing in the early parts.

Speaker Change: of that process over the next six to 12 months to be almost at the level of retail pricing because of the lack of supply. This is a very undersupplied market and the growth rates are going to be quite substantial.

Boris Jordan: This is a very undersupplied market, and the growth rates are going to be quite substantial because regulation didn't allow us to build farms that were bigger than the tier one grows that we have already. However, as we are allowed to, we will be expanding those growth facilities according to regulation. So we also anticipate opening the six stores that we are allowed to have now by the first quarter of next year.

Speaker Change: because regulations didn't allow us to build grows that were bigger than the t one growth that we have already

Speaker Change: So, however, as we are allowed to, we will be expanding those growth facilities according to regulation. So, we also anticipate to open the six stores that we have now by the first quarter of next year. They will be opening up at different times, but between now and the end of the first quarter, we anticipate to have our full fleet of eight stores open in the Ohio market. But we also see the big wholesale opportunity, and as I said, this is our best performing in terms of yield and manufacturing facility in the country.

Unknown Executive: This is a very undersupplied market, and the growth rates are going to be quite substantial because regulation didn't allow us to build growth that was bigger than the tier one growth that we have already. However, as we are allowed to, we will be expanding those growth facilities according to regulation. So we also anticipate opening the six stores that we have now by the first quarter of next year. They will be opening at different times, but between now and the end of the first quarter, we anticipate having our full fleet of eight stores open in the Ohio market.

Boris Jordan: They will be opening at different times, but between now and the end of the first quarter, we anticipate to have our full fleet of eight stores open in the Ohio market. But we also see a big wholesale opportunity, and as I said, this is our best performing facility in terms of yield and manufacturing facility in the country. The next question comes from Matt McGinley with Needham. Please go ahead. Thank you. You indicated that gross margin improved throughout the quarter and that you hit 50% and

Unknown Executive: But we also see the big wholesale opportunity, and as I said, this is our best performing facility in terms of yield and manufacturing facility in the country. The next question comes from Matt McGinley with Needham. Please go ahead. Thank you. You indicated that gross margin improved throughout the quarter and that you hit 50% in...

Matt Mcginley: Your next question comes from Matt McGinley with Newtown. Please go ahead.

Matt Mcginley: The next question comes from Matt McGinley with Needham. Please go ahead.

Speaker Change: The next question comes from Matt McGinley with Needham. Please go ahead.

Speaker Change: it

Speaker Change: communindicated that gross margin improved through the quarter that you hit fifty percent in june july that overall your gross margin was pretty similar to you hadinthe first quarter around forty eight percent the end of at fifty percent you were well be low that to start

Speaker Change: Why did that gross margin dip earlier in the quarter, and what's different about the inventory position or mix or production that gives you the conviction that you can sustain that gross margin at around 50% for the remainder of the year? Yeah, Matt, to be honest, too much discounting around 420.

Boris Jordan: Matt, to be honest, too much discounting around Fortune, and probably something we're going to look at as a strategy going forward. And I don't think you're going to see that, but it has historically been a process that everybody has participated in, and instead of discounting just on the day of 4-20 or a couple of days before, it's been a month-long process. And so April was extraordinarily low compared to May and June, and June recovered fully.

Unknown Executive: Matt, to be honest, too much discounting around Fortune, and probably something we're going to look at as a strategy going forward. And I don't think you're going to see that, but it has historically been a process that everybody has participated in, and instead of discounting just on the day of 4-20 or a couple days before, it's been a month-long process. And so April was extraordinarily low compared to May and June, and June recovered fully.

Speaker Change: And probably something we're going to look at as a strategy going forward, and I don't think you're going to see that, but it has been historically a process that everybody's participated in, and instead of discounting just on the day of 420 or a couple days before, it's been a month-long process.

Speaker Change: And so April was extraordinarily low compared to May and June , and June recovered fully.

Boris Jordan: And as a whole, you're going to see Curaleaf changing its strategy, and we're already walking away from a lot of the discounting strategies, especially with product improvements that we've seen and potency and product assortment. We've had a huge reception for brick and stick, our fruit stick product.

Unknown Executive: And as a whole, you're going to see Curaleaf changing its strategy, and we're already walking away from a lot of the discounting strategies, especially with product improvements that we've seen, potency, and product assortment. We've had a huge reception for brick and stick, our fruit stick product.

Speaker Change: As a whole, you're going to see Curaleaf changing its strategy, and we're already walking away from a lot of the discounting strategies, especially with product improvements that we've seen, and potency and product assortment. We've had a huge reception to brick and stick.

Boris Jordan: And so we're moving away from a discounting strategy and much more pricing to our margin targets. And so that's why you're seeing a very, very strong July. And I think into August, you're going to even see stronger.

Unknown Executive: And so we're moving away from a discounting strategy and much more pricing to our margin targets. And so that's why you're seeing a very, very strong July. And I think into August, you're going to even see stronger.

Speaker Change: are foodstick products. And so we're moving away from a discounting strategy and much more pricing to our margin targets. And so that's why you're seeing a very, very strong July, and I think into August, you're going to even see stronger expansion of margin.

Ty Collin: The next question comes from Ty Collin with H Capital. Please go ahead.

unknown: The next question comes from Ty Collin with H Capital. Please go ahead. Hey, good afternoon. Thanks for the question. I'm just wondering if you could discuss the level of

Ty Collin: The next question comes from Ty Collin with H Capital. Please go ahead.

Ty Collin: The next question comes from Ty Collin with H Capital. Please go ahead. Hey, good afternoon. Thanks for the question. I'm just wondering if you could discuss the level of

Speaker Change: Next question comes from Ty Collins with H Capital. Please go ahead.

Ty Collins: Hey, good afternoon. Thanks for the question. I'm just wondering if you could discuss the level of promotional activity you're seeing across your footprint.

Ty Collins: and how that's changed over the last months and quarters, particularly as you're starting to see some weakness emerge in the job market.

Speaker Change: consumers continue to face.

Boris Jordan: Thanks. So I'll start with macro. You know, obviously, you can't avoid the macro situation in the country, right? You've got a high inflationary environment, and even though we're probably going into a rate reduction cycle, that's not going to filter through to the consumer for a good 12 months. So I still think that the peak period of pressure on the consumer is yet to come in the United States, and I think we're going to see that going into the fourth quarter.

Speaker Change: A number of headwinds. Just wondering if you could discuss any changes you've observed there. Thanks.

Unknown Executive: Thanks. So, I'll start with macro, you know. Obviously, you can't avoid the macro situation in the country, right? You've got a high inflationary environment, and even though we're probably going into a rate reduction cycle, that's not going to filter through to the consumer for probably a good 12 months. So, I still think that there's the peak period of pressure on the consumer that has yet to come in the United States, and I think we're going to see that going into the fourth quarter and the first quarter. And so, I think there'll be continued pressure.

Speaker Change: I'll start with macro, you know, obviously, you can't avoid the macro situation in the country, right? You've got a high inflationary environment, even though we're probably going into a rate reduction cycle, that's not going to filter through to the consumer probably for a good 12 months.

Speaker Change: so i still think that those

Speaker Change: the peak period of pressure on theconsummer have to come unitedst andithink we're going to see going the th arter the first quarter and so i think 'll be continued pressure however the one thing i have noticice and i think we'llall noticice about cannabis that if you have high quality product

Boris Jordan: And so I think there'll be continued pressure. However, the one thing I have noticed, and I think we've all noticed about cannabis, is that if you have a high quality product, it sells, and you don't have to discount it. And so as Curaleaf has improved its operations across the footprint of all of our facilities, and our product quality has increased quite dramatically, we're finding that we have to discount much less, so that we can fight some of the price pressures that we've seen in the market today.

Unknown Executive: However, the one thing I have noticed, and I think we've all noticed about cannabis, is that if you have a high-quality product, it sells, and you don't have to discount it. And so, as Curaleaf has improved its operations across the footprint of all of our facilities, and our product quality has increased quite dramatically, we're finding that we have to discount much less, so that we can fight some of the price pressures that we've seen in the market today.

Speaker Change: It sells, and you don't have to discount it.

Speaker Change: And so, as Curaleaf has improved its operations...

Speaker Change: Across the footprint of all of our facilities and our product quality has increased quite dramatically.

Speaker Change: We're finding that we have to discount much less.

Boris Jordan: But we can't avoid the fact that there are also competitors in the marketplace whose maybe balance sheets or other pressures on them are a little bit significant. And so they are discounting dramatically. And we've seen that in two states in particular.

Speaker Change: and so that we can fight some of the price pressures that we've seen in the market today.

Unknown Executive: But we can't avoid the fact that there are also competitors in the marketplace whose maybe balance sheets or other pressures on them are a little bit significant, and so they are discounting dramatically, and we've seen that in two states in particular. And the issue is that we're big operators in both those states, that is, Florida and Arizona, where we have had 200 plus million dollar businesses, and therefore, we can't escape the fact that there is that price compression in those states.

Speaker Change: But we can't avoid the fact that there are also competitors in the marketplace.

Speaker Change: whose maybe balance sheet or other pressures on them are a little bit significant. And so they are discounting dramatically. And we've seen that in two states in particular. And the issue in those is that we're big operators in both those states, that's Florida and Arizona, where we've had 200 plus million dollar businesses.

Boris Jordan: And the issue is that we're big operators in both those states, that is, Florida and Arizona, where we have had 200 plus million dollar businesses. And therefore, we can't escape the fact that there is that price compression in those states. But as we increase product quality, we're finding that we have to discount less, and more and more people are buying products. An example of this is in Germany, where our 420 product prices are probably a 300, 400 basis point difference from our competitors.

Speaker Change: And therefore, we can't escape the fact that there is that price compression in those states. But as we increase the product quality...

Unknown Executive: But as we increase product quality, we're finding that we have to discount less, and more and more people are buying products. An example of this is in Germany, where our 420 product prices are probably a 300, 400 basis point difference to our competitors, and the reason is that it's a very, very high quality product. And one of the reasons we have introduced a mid-tier product under the Curaleaf branding is because there are a lot of price-sensitive consumers.

Speaker Change: We're finding that we have to discount less, and more and more people are buying products. An example also is in Germany, where our 420 product

Speaker Change: Prices at probably a

Speaker Change: You know, three, four hundred basis point difference to our competitors.

Boris Jordan: And the reason being is that it's a very, very high quality product. And one of the reasons we have introduced a mid-tier product under the Curaleaf branding is because there are a lot of price-sensitive consumers. We haven't played in that segment.

Speaker Change: And the reason being, it's a very, very high-quality product. And one of the reasons we have introduced a mid-tier product on the Curaleaf branding is because there is a lot of price-sensitive consumers. We haven't played in that segment. We do play in that segment in the U.S., we don't play in that segment in Europe , and we're now, with our Portuguese facility coming online fully, we're starting to export product from there, which will be playing to that mid-tier, therefore expanding our customer base.

Unknown Executive: We haven't played in that segment; we do play in that segment in the US, but we don't play in that segment in Europe, and now, with our Portuguese facility coming online fully, we're starting to export product from there, which will be playing to that mid-tier, therefore expanding our customer base at a better price, and the cost of that product is significantly lower than our indoor product because we're growing it in greenhouses in Portugal. So we're not going to be eroding our margin, but we are going to be playing in a much wider segment of the market by supplying the greenhouse-grown product to the German market.

Boris Jordan: We do play in that segment in the US; we don't play in that segment in Europe. And now, with our Portuguese facility coming online fully, we're starting to export product from there, which will be played into that mid tier, therefore expanding our customer base at a better price. And the cost of that product is significantly lower than our indoor product because we're growing it in greenhouses in Portugal. So we're not going to be eroding our margin, but we are going to be playing in a much wider segment of the market by supplying the greenhouse-grown product to German customers.

Speaker Change: at a better pricing and the cost of that product is significantly lower than our indoor product because we're growing it in greenhouses in Portugal. So we're not going to be eroding our margin, but we are going to be playing in a much wider segment of the market by supplying.

Speaker Change: The Greenhouse Grown Product into the German Market.

Pablo Zuanic: The next question comes from Pablo Zuanic with Zuanic & Associates. Please go ahead.

Speaker Change: The next question comes from Pablo Zuanic with Zuanic & Associates. Please go ahead.

Pablo Zuanic: Thank you. Boris, you know, I want to ask you a crystal ball question, if you don't mind, but I guess the first one is, you know, your latest thoughts in terms of whether we get rescheduled before January 20th. You know, some of us expected this would happen by, you know, August 19th when we had the Democratic Convention, but just your latest thoughts on that. But number two, the bigger picture question, and I guess just hear me out here: I know there's a lot of uncertainty, right?

Pablo Zuanic: Thank you. Boris, you know, I want to ask you a crystal ball question, if you don't mind, but...

Pablo Zuanic: I guess the first one is, you know, your latest thoughts in terms of whether we get rescheduling before January 20th.

Speaker Change: You know, some of us had expected this would happen by, you know, August 19th when we had the Democratic Convention.

Speaker Change: But just your latest thoughts on that. But number two, the bigger picture question, and I guess just hear me out here, I know there's a lot of uncertainty, right? What happens with rescheduling? What happens with the election?

Pablo Zuanic: What happens with rescheduling? What happens with the election? But let's say that we come to January 20th, Kamala Harris, Vice President Harris is the new president, Democrats control two chambers, right, and I know there are a lot of hypotheticals there, but we still don't have rescheduling. So, you know, what happens in that scenario? Based on her comments before, she may just want to de

Speaker Change: But let's say that we come to January 20th, Kamala Harris, Vice President Harris is the new president, Democrats control two chambers, right, and I know there's a lot of hypotheticals there, but we still don't have rescheduling.

Speaker Change: So, you know, what happens in that scenario? Based on her comments before, she may just want to de-schedule, right? And what I see here...

Pablo Zuanic: And what I see here is an opportunity with the Farm Bill, right? The 2023 Farm Bill hasn't happened yet. It's supposed to happen in 2025. Do you believe that there's an opportunity for, you know, the blue, the Democrats, right, to push cannabis and then the red hemp with the Farm Bill try to come together and do something so we see congressional action on cannabis and we get the Farm Bill finally done? Sorry, I know that's a lot of hypotheticals there, but I'd love to hear your thoughts on that. Thank you. Um, I should

Speaker Change: It's an opportunity with the Farm Bill, right? The 2020-2023 Farm Bill hasn't happened.

Speaker Change: It's supposed to happen in 2025. Do you believe that there's an opportunity for, you know, the Blue, the Democrats, right, to push cannabis and then the Red Hemp with the Farm Bill try to come together and do something so we see congressional action in cannabis and we get the Farm Bill finally done?

Speaker Change: Sorry, I know that's a lot of hypotheticals there, but I'd love to hear your thoughts on that. Thank you.

Unknown Executive: I don't have a crystal ball, but let me try and briefly answer the question. So, do we think that rescheduling will happen, and when? You know, listen. We know as much as anybody else. We don't know any more than anybody else.

Boris Jordan: I don't have a crystal ball, but let me try and briefly answer the question. So do we think that rescheduling will happen, and when? You know, listen. We know as much as anybody else. We don't know any more than anybody else.

Speaker Change: I don't have a crystal ball, but let me try and briefly answer the question. So, do we think that rescheduling has happened and when? You know, listen, we know as much as anybody else. We don't know any more than anybody else. My view has always been...

Boris Jordan: My view has always been that if they're going to use this as a campaign issue, the closer you announce something during a campaign, the more people remember it, and the better it is. So I've made my position public that if the decision is to reschedule before the election, that decision will probably come late September or October rather than before the campaign. So that's my view. I hope I'm wrong and it comes before the convention, but in this particular situation, if they make a decision to reschedule before the election, that's when it would come.

Unknown Executive: My view has always been that if they're going to use this as a campaign issue, the closer you announce something during a campaign, the more people remember it, and the better it is. So I've made my position public that if the decision is to reschedule before the election, that decision will probably come late September or October rather than before the campaign. So that's my view. I hope I'm wrong and it comes before the convention, but in this particular situation, if they make a decision to reschedule before the election, that's when it would come.

Speaker Change: that, if they're going to use this...

Speaker Change: As a campaign issue, the closer you announce something to a campaign,

Speaker Change: The more people remember it, the better it is. So I've made my position public that if the decision is to reschedule before the election, that that decision will probably most likely come late September or October rather than before the convention.

Speaker Change: So that's my view. I hope I'm wrong and it comes before the convention, but in this particular situation, if they make a decision to reschedule before the election, that's when it would come. So that's what I'm prepared to say on that issue.

Boris Jordan: So that's what I'm prepared to say on that. On the next question, listen, the way I'd like to deal with that is that there are a lot of hypotheticals there, so it's very difficult to address. So we can do that in a private conversation because it's a long answer.

Unknown Executive: So that's what I'm prepared to say on that. On the next question, listen, the way I'd like to deal with that is that there are a lot of hypotheticals there, so it's very difficult to address. So we can do that in a private conversation because it's a long answer.

Speaker Change: On the next question, listen, the way I'd like to deal with that is that...

Speaker Change: There's a lot of hypotheticals there, so it's very difficult to address, so we can do that in a private conversation, because it's a long answer. I just want to say one thing. I believe that the hemp market is the one that's having the largest impact on the regulated cannabis industry.

Unknown Executive: I just want to say one thing. I believe that the hemp market is the one that's having the largest impact on regulated cannabis. I don't care what anybody says, we're seeing it across the board. But more importantly, what I think it is, is that the regular cannabis industry, if I can say that, is the OG market. It's where people come that have been using cannabis for a long time and are very familiar with the product.

Boris Jordan: I just want to say one thing. I believe that the hemp market is the one that's having the largest impact on regulated chemistry. I don't care what anybody says, we're seeing it across the board. But more importantly, what I think it is, is that the regular cannabis industry, if I can say that, is the OG market. It's where people come that have been using cannabis for a long time and are very familiar with the product.

Speaker Change: I don't care what anybody says, we're seeing it across the board. But more importantly, what I think it is, is that the regularist cannabis industry, if I can say that, is the OG market. It's where people come that have been using cannabis for a long time and are very familiar with the product.

Unknown Executive: The hemp market is opening up a brand new customer, the customer that doesn't want to come into a dispensary, the customer that does not want to be seen as an associate that is trying these products, and then, particularly, the beverage side. I've always said that, just like I said Europe would be a big market, and nobody believed it; now it's becoming that.

Boris Jordan: The hemp market is opening up a brand new customer, the customer that doesn't want to come into a dispensary, the customer that does not want to be seen as an associate that is trying these products, and then, particularly, the beverage side. I've always said that, just like I said, Europe would be a big market, and nobody believes it, and now it's becoming that.

Speaker Change: The hemp market is opening up a brand new customer, the customer that doesn't want to come into a dispensary, the customer that does not want to be seen as an associate, that is trying these products.

Speaker Change: And then particularly the beverage side. I've always said that, just like I said, Europe would be a big market, and nobody believed it, and now it's becoming that.

Unknown Executive: I've always said beverages are going to be a big market. I think beverages are going to be the largest segment after flour in the cannabis sector in a very short period of time and eventually will be the largest, and the only place you can do that at scale is in the hemp market because of the economies of bottling and then distributing nationally. And so I think that it's a very interesting market to operate in. We want to be a major player in the beverage market. We think there's a huge amount of upside in it, and we're already seeing it in pre-orders as very, very interesting.

Boris Jordan: I've always said beverages are going to be a big market. I think beverages are going to be the largest segment after flour in the cannabis sector in a very short period of time and eventually will be the largest, and the only place you can do that at scale is in the hemp market because of the economies of bottling and then distributing nationally. And so I think that it's a very interesting market to operate in. We want to be a major player in the beverage market. We think there's a huge amount of upside to it. We're already seeing it in pre-orders that it's very, very interesting.

Speaker Change: I've always said beverages are going to be a big market. I think beverages are going to be the largest segment after flour in the cannabis sector in a very short period of time and eventually will be the largest. And the only place you can do that at scale is in the health market because of the economies of bottling and then distributing nationally.

Speaker Change: And so I think that it's a very interesting market to operate in. We want to be a major player in the beverage market. We think there's a huge amount of upside in it. We're already seeing it in pre-orders, that it's very, very interesting, and we'll be expanding our SKUs and expanding the flavors and different types of products we'll be issuing through the beverage market here shortly, and we'll be making those announcements.

Unknown Executive: We'll be expanding our SKUs and expanding the flavors and different types of products we'll be issuing through the beverage market here shortly, and we'll be making those announcements. I also think that the cannabis industry needs to work with the hemp industry. Instead of fighting the hemp industry, I think we should be working together. The farmers have a much stronger lobby than the cannabis industry. They seem to have the ear of the Republicans as well, with the actions we saw in both Florida and in other states as well, and so Cureleaf is trying to lead the way in that conversation, and we're working together today with large hemp farmers in particular who have a lot more.

Boris Jordan: We'll be expanding our SKUs and expanding the flavors and different types of products we'll be issuing through the beverage market here shortly, and we'll be making those announcements. I also think that the cannabis industry needs to work with the hemp industry. Instead of fighting the hemp industry, I think we should be working together. The farmers have a much stronger lobby than the cannabis industry. They seem to have the ear of the Republicans as well, with the actions we saw in both Florida and in other states as well, and so Cureleaf is trying to lead the way in that conversation, and we're working together today with large hemp farmers in particular who have a lot more.

Speaker Change: I also think that the cannabis industry needs to work with the hemp industry, instead of fighting the hemp industry.

Speaker Change: I think we should be working together, they have a very, the farmers have a much stronger lobby than the cannabis industry, they seem to have the ear of the Republicans as well with the actions we saw in both Florida and in other states as well, and so Curaleaf is trying to lead the way in that conversation, and we're working together today with

Boris Jordan: It's not the hemp product producers. It's the hemp farmers that are the ones that have the political power, and we're trying to join together with them in lobbying Washington. The Farm Bill is not going to get voted on this year. It's going to be pushed into next year, and that's where we want to work together between rescheduling and hemp and creating a regulatory framework that would allow all these products based not on the plants that are grown but the cannabinoids that are being used.

Speaker Change: Thank you. Thank you.

Speaker Change: Farmers in particular, who have a lot more, it's not that...

Unknown Executive: It's not the hemp product producers, it's the hemp farmers that are the ones that have the political power, and we're trying to join together with them in lobbying Washington. The farm bill is not going to get voted on this year. It's going to be pushed into next year, and that's where we want to work together between rescheduling and hemp and creating a regulatory framework that would allow all these products based on not the plants that are grown but the cannabinoids that are being used. We want equal regulation for THC across both the hemp and the regulated cannabis industry as well as the other psychoactive cannabinoids.

Speaker Change: A product producer, this is the hemp farmers.

Speaker Change: There are ones that have the political power, and we're trying to join together with them in lobbying Washington. The Farm Bill is not going to get voted on this year, it's going to be pushed into next year, and that's where we want to work together between rescheduling and hemp, and creating a...

Speaker Change: A regulatory framework that would allow all these products based on not the plant that's grown, but by the cannabinoids that are being used in it. We want equal regulation for THC across both the hemp and the regulated cannabis industry, as well as the other psychoactive cannabinoids.

Boris Jordan: We want equal regulation for THC across both the hemp and the regulated cannabis industry as well as for the other psychoactive cannabinoids. The next question comes from Eric Deslauriers with Craig Hallam Capital Group. Please go ahead. Great, thank you for taking my questions. Could you comment on the wholesale gross market?

Eric DeFlores: The next question comes from Eric DeFlores with Craig Hallam Capital Group. Please go ahead.

Eric Deslauriers: The next question comes from Eric Deslauriers with Craig Hallam Capital Group. Please go ahead.

Speaker Change: Thank you.

Speaker Change: The next question comes from Eric Deslauriers with Craig Hallam Capital Group. Please go ahead.

Unknown Executive: Great, thank you for taking my questions. Could you comment on wholesale gross margins and how you expect those to impact company-wide gross margins as wholesale continues becoming a larger mix, especially with the new hire implementing these efficiencies across production and processing? How much margin have you seen? I know it's only, I think you said it's only been five months since that employee joined, and how much more room do you see to go on wholesale gross margins? Thank you.

Eric Deslauriers: Great, thank you for taking my questions.

Eric Deslauriers: Did you comment on wholesale gross margins and how you expect those to impact?

Speaker Change: Company-wide gross margins as wholesale continues becoming a larger mix.

Speaker Change: Especially with the new hire implementing these efficiencies across production and processing. How much margin have you seen? I know it's only, I think you said it's only been five months since that employee joined and sort of how much more room do you see to go on wholesale gross margins? Thank you.

Boris Jordan: Thank you. So our internal target is to achieve a 50% gross margin on our wholesale business. Our retail business actually commands a typically higher margin than that. Not in every market can we do that, though. There are certainly markets where prices are more compressed, like in Arizona, where achieving a 50% gross margin is very, very difficult on the wholesale side. But our internal target for our salespeople is to achieve a 50% gross margin in the wholesale business.

Unknown Executive: So, our internal target is to target a 50% gross margin on our wholesale business. However, our retail business actually commands a higher margin than that. Not in every market can we do that, though. There are certainly markets where prices are more compressed, like in Arizona, where achieving a 50% gross margin is very, very difficult on the wholesale side, but our internal target for our salespeople is to target a 50% gross margin in the wholesale business. And, particularly in the eastern states and some of the midwestern states, we're able to achieve that, but in some of the western states, we're not So that's our overall target.

Speaker Change: So our internal target is to target a 50% gross margin on our wholesale business.

Speaker Change: Our retail business actually commands, typically, a higher margin than that. Not in every market can we do that, though. There are certainly markets where prices are more compressed, like in Arizona, where achieving a 50% gross margin is very, very difficult on the wholesale side. But our internal target for our salespeople is to target a 50% gross margin in the wholesale business. And particularly in the eastern states and some of the midwestern states, we're able to achieve that, but in some of the western states, we're not able to achieve that due to the fact that they have more price compression than the eastern states.

Boris Jordan: And particularly in the eastern states and some of the midwestern states, they were able to achieve that, but some of the western states were not able to achieve that due to the fact that they had more price compression than the eastern states. So that's our overall target.

Operator: Thank you. This concludes our question and answer session. I would like to turn the conference back over to Camilo for any closing remarks.

Camilo Lyon: Thank you. This concludes our question and answer session. I would like to turn the conference back over to Camilo for any closing remarks.

Speaker Change: Thank you. This concludes our question and answer session. I would like to turn the conference back over to Camilo for any closing remarks.

Camilo Lyon: Thanks everyone for joining. We will talk to you in 90 days.

Camilo Lyon: so

unknown: [inaudible] Daniel, Daniel, Daniel, Daniel, Daniel, Daniel, [music]

Q2 2024 Curaleaf Holdings Inc Earnings Call

Request a DemoDemo

CUR

Curaleaf Holdings

Earnings